HomeMy WebLinkAboutMorgan Guaranty Trust Company - 1992-04-0610,
FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to Credit Agreement (the
"Amendment'), dated as of March 31, 1992 is entered into by
WATERFRONT CONSTRUCTION #1, A CALIFORNIA LIMITED PARTNERSHIP
(the "Issuer"), and THE DAI-ICHI KANGYO BANK, LTD., a Japanese
banking corporation acting through its Los Angeles Agency (the
"Hank").
Recital
A. The Issuer and the Bank have entered into a Credit
Agreement dated as of March 31, 1989 (the "Credit Agreement").
Terms defined in the Credit Agreement and not otherwise defined
herein have the same respective meanings when used herein, and
the rules of interpretation set forth in Section 1.03 of the
Credit Agreement are incorporated by reference herein.
B. Section 5.07(a) of the Credit Agreement set forth
certain conditions for the extension of the Availability
Termination Date from May 38 1991 to May 3, 1994. As of May 3,
1991, the condition set forth in Section 5.07(a)(iii) of the
-Credit Agreement and the covenant set forth in Section 8.15(a)
of the Credit Agreement with respect to the delivery to and
receipt by the Bank of the Standby Letter of Credit had not
been met.
C. The Issuer and the Bank entered into a First
Amendment to Credit Agreement dated as of May 3, 1991 (the
"Original Amendment") and a letter agreement dated May 3, 1991
(the "Letter Agreement"), which, subject to satisfaction of
certain conditions set forth therein, provided the appropriate
waiver and extension to permit the Issuer to satisfy, at a
later date, the condition and covenant described in Recital B
and thereby effectuate the extension of the Availability
Termination Date.
D. In connection with the Original Amendment and the
Letter Agreement, (1) Robert L. Mayer, as Trustee of The
Robert L. Mayer Trust of 1982, dated June 22, 1982, as amended
(in such capacity, the "Trustee"), executed a Guaranty dated as
of May 3, 1991 (the "Trust Guaranty") in favor of the Bank and
(2) the Trustee, the Bank and Prudential-Bache Securities, Inc.
(the "Broker") entered into a Pledge Agreement dated as of
May 3, 1991 (the "Original Pledge Agreement") -in order to
secure the Trustee's obligations under the Trust Guaranty.
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r� E. Each of the Original Amendment and the Letter
Agreement became null and void and of no effect ab initie duA
to the Issuer's failure to satisfy certain conditions let forth
therein. Accordingly, certain Events of Default have occurred
and have been continuing since May 3, 1991.
F. The Trust Guaranty and the Original Pledge Agreement
continue to be in full force and effect.
G. Upon the terms and conditions set forth below, the
Bank agrees to grant certain waivers,the Issuer agrees to cure
certain Events of Default and the parties hereto agree to amend
the Cashf low Guaranty and entor into a now Pledge Agreement to
replace the Trust Guaranty and the Original Pledge Agreement,
all as more fully set forth below.
NOW, THEREFORE, the Issuer and the Bank have agreed to
amend the Credit Agreement as hereinafter eet forth.
SECTION 1, Amendments to Credit A reement. The Credit
Agreement is, sub ect to sat s act on of t A conditions
precedent set forth in Sections 2 and 3(a), effective as of
April 15, 1992 (the "Effective Date`), hereby amended as
f of lowa l
(a) the following definitions in Section 1.01 of the
Credit Agreement are amended in their entirety to read as
followst
"Agreement' means this Credit Agreement, as amended
by t e F rst Amendment , and as further amended from
time to time.
'Assignment of Operating A reement' means the
Aaa gnment of Operating Agreement and Subordination
Agreement and Amendment dated as of Xarch 31, 1992
among the Issuer, the Bank and the Operator.
'Availability Period Commitment' means, during the
AvaiIab11ty Por od, the OU119ation of the Bank to
make loans and to issue LOCs up to the aggregate
principal amount at any time of $55,000,000.
'Availability Termination Date' means January 1,
1993.
'Cashflow Guaranteed Amounts' means, at any time and
from time to time, r e rem r Wing liability of tho
Guarantor under the Cashflow Guaranty at such time.
'Cashflow Guaranty, means the Cashflvw Guaranty,
dated May 3,, , executed by the Guarantor, as
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amended by the First Amendment to Cashflow Guaranty,
dated as of March 31, 1992, among the Guarantor and
the Bank, and as further amended from time to time.
'Deed of Trust' means the Leasehold Deed of Trust and
Secur ty Agreement and Fixture Filing and Assignment
of Rents (Construction Trust Deed), dated as of
March 31, 1989, made by the Issuer for the benefit of
the Bank and recorded in the Official Records of -
Orange County, California on May 1, 1989 as
Instrument No. 89-229784, as amended by the First
Modification to Leasehold Deed of Trust and Security
Agreement and Fixture Filing and Assignment of Rents
(Construction Trust Deed), dated as of March 31,
1992, between the Issuer and the Bank.
'Eurodollar Rate' means, for any Loan, an interest
rate per annum equal, at all times during each
Interest Period for such Loan, to the sum of LIBOR
for such Interest Period plus 1.501.
'Guarantor' means, collectively, Robert L. Mayer, in
h1s-1ndividual capacity, and Robert L. Mayer as
Trustee of The Robert L. Mayer Trust of 1982, dated
June 22, 1982, as amended.
'Operating Agreement' means the Hotel Management and
Operating Agreement dated as of January 2, 1991
between the Issuer and the Operator, as amended by
the Assignment of Operating Agreement.
'Operative Agreements' means, collectively, this
Agreement, the Security Instruments, the Interest
Rate Protection Agreement, the CP Agreements, the
Project Agreements and any other agreement designated
as such by the Issuer and the Bank from time to time
by written agreement.
'Op2ratorl means Destination Properties, Inc., a
California corporation. .
'Prime -Based Rate' means, for any Loan, a fluctuating
interest rate per annum equal at all times to the
Prime Rate plus 0.25%.
'Security Instruments' means the Assignments, the
Environments In emnity, the Cashflow Guaranty, the
Deed of Trust and the Pledge Agreement.
'Term Rate' means for any Loan, an interest rate per
annum equal, at all times during each Interest Period
relating thereto, to the sum (which sum shall be
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rounded upwards, if necessary, to the nearest 1/100
of 1%) of the Term Federal Funds Rate for such
Interest Period plus 1.50%."
�b) the definition of "AssignmentB" in Section 1.01
of the Cre it Agreement is amended by deleting the words
"Consent Concerning Development Agreement" therefrom..
(c) the definition of "Interest Period" in
Section 1.01 of the Credit Agreement is amended by adding the
words "or Term Loan" after the words "Eurodollar Loan" in
line 1 of subsection (a) and by deleting subsection (b).
(d) the following new definitions are added to
Section 1.01 of the Credit Agreement in the proper alphabetical
order:
"'Excess Cash Flow' has the meaning assigned to that
term in Section 8,of the First Amendment.
'First Amendment' means the First Amendment to Credit
Agreement dated as of March 31, 1992 between the Bank
and the Issuer.
'Pledge Agreement' means the Pledge Agreement, dated
as of March 31, 1992, among Robert L. Mayer, as
Trustee of The Robert L. Mayer Trust of 1982, dated
June 22, 1982, as amended, Prudential-Bache
Securities, Inc. and the Bank."
(e) Section 2.02(a)(iv) of the Credit Agreement is
amended by adding the following proviso to the end thereof:
"; rov�ided, however, that, with respect to the
duration of an Interest Period applicable to a Loan,
only such duration may be selected as there are
sufficient funds in the Reserve Account (as defined
in the First Amendment) to cover interest and hedge
payments with respect to such Loan during such
Interest Period."
(f) Section 2.03(a) of the Credit Agreement is
amended in its entirety to read as follows:
"Section 2.03. Interest on Loans. (a) The Issuer
shall pay to the Ba interest on the unpaid
principal amount of each Loan until such principal
amount is paid in full, payable, to the extent
accrued, on the date on which such principal amount
is repayable pursuant to Section 2.04, and (i) with
respect to each Prime Loan, at the Prime -Based Rate,
on the first Business Day of each month and on the
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Availability Termination Date, (ii) with respect to
each Eurodollar Loan, at the Eurodollar Rate, on the
first Business Day of each month, and on the
Availability Termination Date, and (III) with respect
to each Term Loan, at the Term Rate, on the first
Business Day of each month, and on the Availability
Termination Date."
(g) Section 3.05 of the Credit Agreement is amended
in its entirety to read as follows: .
"Section 3.05. LOC Fee. The Issuer shall pay to the
Bank in arrears on the day of each calendar
month an LOC fee in an amount equal to 1.50% per
annum on the average daily amount of the LOC
Utilization from the period from and including the
Effective Date to but excluding the Availability
Termination Date."
(h) Section 5.07 of the Credit Agreement is deleted
in its entirety.
(i) Section 8.15 of the Credit Agreement is deleted
in its entirety.
(j) The following new Section 9.01(1) is added to
Article IX of -the Credit Agreements
0(1) The Issuer, or any other party responsible
therefor, shall fail to comply with any of the
provisions of Sections 4 or 6 of the First Amendment;
provided, that failure to comply with any provision
ot Section 4(b) (III) of the Amendment on or prior to
the respective dates set forth therein (each a "Due
Date") shall not be an Event of Default unless such
failure is continuing for a period of five (5)
Business Days after such applicable Due Date ."
(k) Section 11.04 of the Credit Agreement is deleted
in its entirety.
(1) Section 12.14 of the Credit Agreement is deleted
in its entirety.
SECTION 2. Conditions of Effectiveness. This Amendment
shall become effective when, and only when, the Bank shall have
received this Amendment executed by the Ip suer and the Bank
shall have additionally received all of the following documents
(each dated the date of receipt by the Bahk) in form and
substance reasonably satisfactory to the Pank, the following
events shall have occurred and the following shall be true:
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{ (a) an executed Estoppel Certificate from the
Redevelopment Agency of the City of Huntington Beach (the
"Agency") with respect to its obligations under the Amendment
to Development Agreement (as defined below), in form and
substance satisfactory to the Bank;
(b) an executed First Modification to the Deed of
Trust, substantially in the form of Exhibit "B" hereto (the
"Modification");
(c) an executed UCC-2 Financing Statement Change in
connection with the Modification ("UCC-20), which UCC-2 is
forwarded by Bank's counsel for filing with the California
Secretary of State;
(d) an executed Pledge Agreement, substantially in
the form of Exhibit "C' hereto (the "Pledge Agreement");
(e) an executed UCC-1 Financing Statement in
connection with the Pledge Agreement and an executed UCC-2
Financing Statement in connection with the Original Pledge
Agreement (collectively, "Pledge UCCs"), which Pledge UCCs are
forwarded by Bank's counsel for filing with the California
Secretary of State;
(f) an executed First Amendment to Cashflow
' Guaranty, substantially in the form of Exhibit "D" hereto;
(g) Issuer has established an operating account at
Metrobank (the "Operating Account");
(h) an executed Notice of Security Interest in
Account, substantially in the form of Exhibit "E" hereto;
(i) an executed Assignment of Operating Agreement
and Subordination- Agreement and Amendment, substantially in the
form of Exhibit "F" hereto;
(j) a letter duly executed by the Agency, committing
the Agency to deliver $4,300,000 to the Bank on or prior to
April 15, 1992;
(k) a copy of the executed Third Amended and
Restated Lease, dated as of April 28, 1999 (the "Phase II
Lease"), by and between the Redevelopment Agency of the City of
Huntington Beach and Trustee, certified by Trustee as true and
correct;
(1) certified Resolutions of the Board of Directors
of The Waterfront, Inc. approving this Amendment and the other
documents delivered or to be delivered hereunder to which the
Issuer is a party and the transactions contemplated hereby and
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thereby and authorizing its officers to execute the same and
setting forth their titles and specimen signatures;
(m) the Modification is recorded in the Official
Records of Orange County, California and Issuer has provided
evidence thereof to Bank;
(n) Chicago Title Insurance Company has committed to
(i) issue, prior to recordation of the Modification, and
thereafter has issued, effective as of recordation of the
Modification, an ALTA Rewrite of and such endorsements to its
Policy No. 739513-2 as are reasonably requested by Bank in
connection with recording the Modification, including without
limitation CLTA Endorsement Nos. 100, 101.1, 110.5 and 111.51
which rewrite and endorsements shall be subject only to such
exceptions as are reasonably acceptable to Bank, (ii) defend
the Bank against any and all claims or actions arising out of
mechanics' liens affecting the real property subject to the
Deed of Trust and (iii) insure the Bank against all liability,
whether for principal or interest, relating to such mechanics'
liens;
(o) opinion of counsel to the Issuer, Robert L.
Mayer and the Trustee as to matters reasonably requested by the
Bank and in form and substance satisfactory to the Bank;
(p) receipt by the Bank of all past -due interest
under the Credit Agreement through the Effective Date,
calculated on a non -default basis;
(q) receipt by the Bank of all past -due hedge
payments under the Initial Interest Rate Protection Agreement
through the Effective Date;
(r) Robert L. Mayer shall have settled Sasco
Electric's claim, the effect of which is to reduce the total
claim of the Contractor by at least $350,000;
(s) receipt by the Bank of the amounts set forth in
Sections 4(a)(vi) and 4(b)(i) below;
(t) there are no liens ,as of the Effective Date,
affecting the real property which is the subject of the Phase
II Lease other than those shown on the title report dated as of
February 2B, 1992 by Chicago Title Company, Order
No. 000622564-4;
(u) a current budget for the 1992 calendar year with
respect to the Hotel, in form and substance satisfactory to the
Bank and satisfying the requirements set forth in Section
4(a)(ii) (the •Hotel Budget"); and
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(v) a copy of that certain Third Amendment to
Disposition and Development Agreement dated as of March 16,
1992 between the Agency and the Trustee (the "Amendment to
Development Agreement"), certified by the Trustee as true and
correct.
SECTION 3. Bank Agreements. Subject to satisfaction of
the conditions and covenants set forth in Sections 2 and 41 the
Bank agrees to do the following and the Issuer consents to the
same:
(a) on the Effective Date:
(i) the Bank shall adjust the unused
Availability Period Commitment by (A) crediting the unused
Availability Period Commitment by $381,917.75 which is the.
amount by which past due interest paid at the default rate
pursuant to the Credit Agreement during the period from
May 3, 1991 to August 1, 1991 exceeds interest at the non -
default rates pursuant to the Credit Agreement during such
period and (B) debiting the unused Availability Period
Commitment by $381,917.75 and applying such amount against
past -due interest payments at the non -default interest
rates under the Credit Agreement;
(ii) the Bank will establish an interest -bearing
account in the Bank's name in which the Issuer shall have
no right, title or interest, except as set forth in
Section 9 hereof (the "Reserve Account•);
(iii) the Bank shall disburse under the Credit
Agreement, and deposit in the Reserve Account, (A) an
amount equal to $1,094,633.45 which is the remaining
unused Availability Period Commitment allocated to
interest or hedge payments and (B) an amount equal to
$763,648 Which is the remaining unused Availability Period
Commitment allocated to construction -costs;
(iv) the Bank shall deposit in the Reserve
Account all amounts received from the Agency pursuant to
Sections 4(a)(vi) and 4(b)(i) below, to be used solely for
past -due and future interest payments under the Credit
Agreement, hedge payments' under the Initial Interest Rate
Protection Agreement or any Interest Rate Protection
Agreement, amounts owing to the Contractor and property
taxes;
(v) the Bank shall instruct the Agency, and
shall instruct the Issuer to instruct the Agency, to pay a
portion equal to approximately $250,000 of the amounts set
forth in Sections 4(a)(vi) and 4(b)(i) below to the title
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company for all past -due property taxes with respect to
the Land and the Project;
(vi) the Bank shall cause to be paid from the
Reserve Account the amount of $25,000 to First California
Capital Markets Group, Inc. ("First California`);
(vii) the Bank shall cause to be paid from the
Reserve Account all past due interest under the Credit
Agreement through the Effective Date, calculated on the
basis of the non -default interest rates pursuant to the
Credit Agreement;
(viii) the Bank shall cause to be paid from the
Reserve Account all past due hedge payments under the
Initial Interest Rate Protection Agreement through the
Effective Date;
(ix) the Bank shall cause to be paid from the
Reserve Account all expenses incurred by the Bank,
including the fees (not to exceed $25,000) and expenses of
its attorneys, in connection with the preparation,
negotiation and documentation of this Amendment, all other
documents to be delivered hereunder and the transactions
contemplated hereby and thereby; and
(x) the Bank shall cause to be paid from the
Reserve Account an amount not to exceed $763,648 into
escrow account number 98-622525-4 held by Chicago Title
Insurance Company (the "Escrow Account"). The Bank shall
instruct the Agency, and shall instruct the Issuer to
instruct the Agency, to pay a portion equal to $762,352 of
the amounts set forth in Sections 4(a)(vi) and 4(b)(i)
below into such Escrow Account. Such amounts shall be
used exclusively for settlement or payment of the
Contractor's or its subcontractors' mechanics' liens or
stop notice claims against the Bank.
(b) effective as of the Effective Dates
(i) the Bank (A) releases Robert L. Mayer from
any and all further liability under (1) the Completion
Guaranty, except as provided in Section 3.06 thereof, and
on the Effective Date the Bank shall return a copy of the
Completion Guaranty to Robert L. Mayer, marked
"Terminated," and (2) the Equity Contribution Agreement,
which shall be terminated, and (B) releases the Trustee
from any and all further liability under (1) the Trust
Guaranty, which Trust Guaranty shall be terminated (except
Trustee's obligations under Section 4 thereof which shall
survive such termination) and superseded by the First
Amendment to the Cashflow Guaranty and (2) the Original
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Pledge Agreement, which shall be terminated and superseded
by the Pledge Agreement; and
(ii) the Bank waives its right to pursue any
remedies against the Issuer, under the Credit Agreement or
otherwise, with respect to any Event of Default occurring
prior to the date hereof of which the Bank has actual
knowledge. With respect to Issuer's payment defaults
occurring prior to the date hereof, the Bank waives its
right to charge default interest (as provided under the
Credit Agreement) with respect to such delinquent payments
during the period from May 31 1991 to and including the
date hereof. The Issuer's payment defaults occurring
prior to the date hereof shall be cured on the date hereof
and on the Effective Date. Except as specifically
provided in this Section 3(b)(ii), the waiver contained
herein shall not in any way affect any other right of the
Bank nor in any way affect any other obligation of the
Issuer under the Credit Agreement or any other agreement
with the Bank.
(c) from and after the Effective Date to and
including December 31, 1992:
(i) the Bank shall deposit in the Reserve
Account all amounts received from the Agency pursuant to
Section 4(b)(ii);
(ii) the Bank shall deposit in the Reserve
Account all amounts received from the Operating Account as
Excess Cash Flow pursuant to Section 4(a)(iii);
(iii) to the extent that there are sufficient
funds in the Reserve Account therefor, the Bank shall
cause to be paid from the Reserve Account all future hedge
payments due and payable during the 1992 calendar year,
when the same become due pursuant to any Interest Rate
Protection Agreement; and
(iv) to the extent that there are sufficient
funds in the Reserve Account therefor, the Bank shall
cause to be paid from the Reserve Account all future
interest payments due and payable during the 1992 calendar
year, when the same become due pursuant to the Credit
Agreement, as amended hereby.
(d) the Bank will look only to the Reserve Account
for satisfaction of the Issuer's obligations to make interest
and hedge payments during the 1992 calendar year and,
notwithstanding anything to the contrary contained in any
Operative Agreement, will not declare an Event 'of Default,
during the 1992 calendar year, if at any time amounts in the
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Reserve Account are not sufficient to make such payments when
due. Howevert any such interest and hedge payments which
accrue and remain unpaid shall be deferred to January 1, 1993
and, together with all other amounts accrued and owing under
the Credit Documents and not paid as of the Effective Date and
listed on Schedule 010 hereto, shall be due and payable in full
on the Avaiabflity Termination Date.
SECTION 4. Covenants. So long as the Credit Agreement,
as amended hereby, is in effect and until all amounts payable
under the Credit Agreement, as amended hereby, shall have been
paid in full, unless compliance shall have been expressly
waived in writing by the Bank,
(a) the Issuer hereby covenants that:
(I) during the period commencing on the
Effective Date and ending on the Availability Termination
Date, the Issuer shall not, and the Issuer shall cause the
Trustee not to, in any way encumber, hypothecate or grant
a security interest in the Phase II Lease or the real
property subject thereto; provided, that liens securing
indebtedness not to exceed $ 000,000 in aggregate
principal amount shall be permitted so long as the
proceeds of the indebtedness secured by such liens are
used solely for the necessary business and personal
purposes of the Trustee and Robert L. Mayer;
(ii) the Issuer shall prepare, and deliver an
updated Hotel Budget to the Bank on a monthly basis during
the 1992 calendar year, corrmencing with the first full
month after the date of this Amendment. The Hotel Budget
shall provide for the cost of the Bank's consultant (as
more fully described in Section 6 below). The Hotel
Budget may also provide for payment to First California of
an amount not to exceed $75,000 in the aggregate over a
period of 9 months following the date of this Amendment.
The Issuer shall not incur any expenses not contained in
the Hotel Budget without the Bank's prior written approval
and will at all times perform in accordance with and abide
by the Hotel Budget.
(iii) the Issuer shall deposit, or cause to be
deposited, all revenues of the Hotel in the Operating
Account, in which the Bank shall have a security interest
pursuant to the Modification. The Issuer shall at all
times maintain the Operating Account at a financial
institution located in the State of California and the
Issuer shall not move the Operating Account to a different
financial institution unless (A) it shall have given prior
written notice to the Bank of its intention to move the
Operating Account, (B) it shall have granted a security
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interest in such new account to the Bank and (C) the
Bank's security interest in such new account shall have
been perfected=
(iv) pursuant to the Assignment of Operating
Agreement, the Issuer shall (A) not pay a Base Management
Fee, pursuant to and as defined in the Operating
Agreement, payable to the Operator during the 1992
calendar year, in an amount in excess of 3% of Gross
Revenue (as defined in the Operating Agreement). (B) not
pay any Incentive Management Fee (as defined in the
Operating Agreement) during the 1992 calendar year and (c)
not pay any accrued and unpaid Base Management Fee (excopt
such Base Management Fee permitted to be paid pursuant to
clause (A) above or Incentive Management Fee for both the
1991 and 1992 calendar years, which unpaid fees shall be
subordinate to all obligations of the Issuer to the Bank
and shall be solely the obligation of the Issuer.
(v) the Issuer shall use its best efforts to
Cause the Agency to execute, Within a reasonablo time
after the Effective Date, an agreement substantially in
the form of Exhibit "A" hereto;
(vi) on or prior to April 15, 1992, pursuant to
Paragraph 7 of the Amendment to Developmont Agreement, the
Issuer shati cause the Agency to pay to the Bank or on
behalf of the Bank, in accordance with the Bank's
instructions, an amount ecpiAl to $4,300,000 in immediately
available funds;
(vil) the Issuer shall defend the Bank in any
action to enforce the Contractor's stop notice filed with
the Bank in connection with the Project; and
(viii) the Issuer shall not withdraw or receive
an interest accruing on funds in the Escrow Account,
which interest shall accrue and remain in the Escrow
Account. All funds in the Escrow Account shall be used
only to settle or pay the Contractor-c or Its
subcontractors' mechanical liens or stop notices filed or
served in connection with the Project. In the event of
any attempted levy of execution on a judgment on
Contractor's stop notice, the Bank shall immediately be
entitled to withdraw all funds, principal and interest, in
the Escrow Account necessary to satisfy such levy.
(ix) Any funds remaining in tho Escrow Account,
including accrued interest, after settlement or payment of
all such liens and stop notices shall forthwith be paid to
tho Bank to be used for such purposes as are mutually
agreed to in writing between the Issuer and the Hank.
20100376 041492
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' (b) the Issuer hereby covenants to enforce the
Amendment to Dovalopmont Agreement, apeciffcally with respect
to the Agency's agreements and obligation thereunder tot
(1) on or prior to April 15, 1992, pursuant to
Paragraph 5(1), (11).and (iii) of the Amendment to
Development Agreement, pay to the Bank or on behalf of the
Bank, in accordance with the Bank'$ instructions, an
amount (approximately $540*000) equal to such portion of
All previously accrued (through the Effcctive Date) and
unpaid TOTS and Property Tax Increments (as such terms are
deffned in the Development Agreement), together with
interest on certain incentive payments, which are
otherwise payable to the Issuer pursuant to the
Development Agreement upon commencement of construction of
phase II of the Site (as defined in the Development
Agreement); and
(1i) pay to the Bank, in accordance with the
Bank's instructions, on a quarterly basis, on the
fifteenth day (if such deny 1w not a Business Day, then on
the next preceding Business Day) of each of April, July
and October, 1992 and January, 2993, an amount
(approximately $460#000) equal to 601 of all TOTS pursuant
to Paragraph 5(1) of the Amendment to Development
Agroement.
SECTION 5. Representations and Warranties of the Issuer.
,- The Issuer rapresents and warrante as follownt
t
(a) The Issuer is a limited partnership duly
organized, validly existing and in goad standing under the laws
of California.
(b) The execution, delivery and performance by the
Issuer of this Amendment and the other documents delivered
pursuant hereto to which it in or is to be a party are Within
the Issuer's partnership powers, have been duly authorized by
all necessary partnership action and do not contravene (I) the
Iascer'a Partnership Agreement, (11) exuept as disclosed in
Writing to the Bank, any Governmental Rule applicable to the
Issuer or any contractual restriction binding on or affecting
the Issuer, or result in, or require, the creation or
imposition of any Lien or preferential arrangement of any
nature upon or with respect to any of the properties now owned
or hereafter acquired by the Issuer.
(c) No Governmental Ac Glon .1%s required for the due
execution, delivery and performance by the Issuer of this
Amendment or any of the other documents delivered pursuant
hereto to which it is or is to be a party, except such
Governmental Action as has already been obtained.
(d) This amendment and each of the other documents
delivered pursuant hereto to which the issuer is a party
conctituta, and to which the Iecuer lc to be a party when
10100171 641191 " 13
delivered hereunder will constitute, legal, valid and binding
obligations of the Issuer enforceable against the Issuer in
accordance with their respective terms, subject to the effect
of bankruptcy, insolvency, reorganization, fraudulent
conveyance, preferential transfer, moratorium and other similar
laws limiting the enforcement of creditors' rights generally
and subject to limitations imposed by equitable principles upon
the availability of the remedy of specific performance,
injunctive relief or other equitable remedies.
(e) Except for actions or proceedings instituted by
the Contractor, there is no pending or threatened action or
proceeding affecting the Issuer before any Governmental Person
that may materially and adversely affect the financial
condition or operations of the Issuer or that purports to
affect the legality, validity or enforceability of this
Amendment or any of the other documents delivered pursuant
hereto.
SECTION 6. Consultant. The Bank and the Issuer
hereby agree that the Banc may, at its option, retain a hotel
consultant to'assist the Bank in monitoring the ongoing
operations of the Hotel. At the request of the Bank, but in
any event no less frequently than monthly, the Issuer agrees
to, and agrees to cause the Operator to, meet, at reasonable
times and upon reasonable notice, with the Bank and its
consultant to discuss the operation and performance of the
Hotel in accordance with the Hotel Budget. The Issuer hereby
agrees that the consultant's fees (not to exceed $25,000) shall
be paid by the Issuer and shall be included in the Hotel
Budget, to be paid from the Hotel's cash flow on a timely
basis.
SECTION 7. Release of Claims.
(a) As of the Effective Date and subject to
satisfaction of the conditions set forth in Section 2, the
Issuer ("Releasor"), for itself, its heirs, administrators,
executors, officers, shareholders, partners, directors,
employees, successors and assigns, now and in the future,
hereby releases and forever discharges the Bank, its 'successors
in interest, transferees and assigns, and their respective
control persons, officers, managers, agents, servants,
employees, attorneys, partners, insurers and underwriters, and
each of them (collectively "Releasees"), from any -and all
manners of actions, liabilities, liens, debts, damages, claims,
crossclaims, suits, judgments, executions and demands of any
kind, nature and description, arising during the riod from
the beginning of the world to and includingthe Effective Date,
which Releasor has had, now has or hereafter can, shall —or —may
have against the Releasees, or any of them, arising out of or
relating to (i) any of the Credit Agreement, any other
20100576 041492 — 14
Operative Agreement or any other agreement executed in
connection with or pursuant to the Credit Agreement or any
other Operative Agreement, as any such agreement is from time
to time amended, (ii) any other dealing, agreement, negotiation
or other relationship between Releasor and any of the Releasees
and (iii) all actions taken or omitted to be taken by Releasor
or any of the Releasees in connection with the foregoing and
all negotiations relating thereto between Releasor and any of
the Releasees.
(b) The release contained in this Section 9 is made
with reference to the laws of the State of California and shall
be interpreted and enforced under and pursuant to the laws of
said State. Releasor understands that Section 1542 of the
California Civil Code reads as follows:
"A general release does not extend to claims which
the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known
by him must have materially affected his settlement with
the debtor."
Releasor understands and hereby waives the provisions
of Section 1542 of the California Civil Code and declares that
it realizes that it may have claims it presently knows nothing
about or does not suspect to exist and acknowledges and agrees
that its release herein extends to such unknown or unsuspected
claims. Releasor also declares that it understands that the
Releasees would not have agreed to enter into this Amendment if
this Release of Claims did not cover damages and their results
which may not yet have manifested themselves or may be unknown
to them or not anticipated at the present time.
(c) The Releasor hereby represents and warrants that
it alone is the owner of the claims hereby released, and it
hereby agrees to indemnify and save harmless each Releasee
against any and all claims or persons claiming to be entitled
to compensation or damages by virtue of injury to themselves or
their property which allegedly resulted from Releasor's
previous contractual, business or other relationships with the
Bank.
SECTION B. A22lication of Hotel Revenues. The
Issuer and the Bank hereby agree that amounts eposited in the
Operating Account as Hotel revenues shall be used for the
Issuer's working capital needs as projected in the Hotel Budget
and as otherwise approved by the Bank. During each calendar
month, any funds in the Operating Account in excess of the sum
of $250,000 and amounts impounded for accrued and unpaid
property taxes and property insurance relating to the real
property subject to the Deed of Trust (such excess funds
referred to herein as "Excess Cash Flow") shall be paid to the
\1f
201OM76 041492 - 15 -
Bank on the first Business Day of such calendar month to be
deposited in the Reserve Account.
SECTION 9. Operating Account and Reserve Account.
The Issuer and the Bank hereby agree that
(a) any interest accruing on funds in the Operating
Account and the Reserve Account shall (i) not be withdrawn and
shall remain in such accounts and be used only for the purposes
for which such accounts have been created, and (ii) accrue for
the benefit of the Issuer and be the liability of the Issuer
for tax purposes; and
(b) in the event the Loans are to be prepaid in
full, the Bank shall concurrently with such prepayment apply
all funds then existing in the Reserve Account to repayment of
principal and interest on the Loans and such other amounts
owing to the Bank.
SECTION 10. Sasco Electric and Cashflow Guarant .
The Issuer and the Bank ere y agree that any amount paid by
Robert L. Mayer to settle the claims by Sasco Electric shall
not reduce, and is in addition to, Robert L. Mayer's
obligations under the Cashflow Guaranty.
SECTION 11. Reference to and Effect on the Operative_
Agreements. "~
(a) Upon satisfaction of the conditions set forth in
Section 2, each reference in the Credit Agreement to "this
Agreement,• "hereunder,• whereof ,• "herein" or words of like
import, and each reference in the other Operative Agreements to
the Credit Agreement, shall mean and be a reference to the
Credit Agreement as amended hereby.
(b) Except as specifically amended above, the Credit
Agreement, and all other Operative Agreements, shall remain in
full force and effect and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of
this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of the Bank
under any of the Operative Agreements or constitute a waiver of
any provision of any of the Operative Agreements. .
SECTION 12. Costs Expenses and Taxes. The Issuer
agrees to pay on demand (except as and to the extent provided
in Section 3(b)(viii) above) all costs and expenses of the Bank•
in connection with the preparation, execution and delivery of
this Amendment and the other instruments and documents to be
delivered hereunder, including the reasonable fees and out--of-
pocket expenses of counsel for the Bank with respect thereto
201OD576 041492
- 16 -
and with respect to advising the Bank as to its rights and
responsibilities hereunder and thereunder and expenses relating
to the recording of the Modification and issuance of
endorsements to the title policy relating to the Deed of Trust.
In addition, the Issuer shall pay any and all stamp and other
taxes payable or determined to be payable in connection with
the execution and delivery of this Amendment and the other
instruments and documents to be delivered hereunder, and the
Issuer agrees to save the Bank harmless from and against any
and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes.
SECTION 13. Execution in CounteK2arts. This Amend-
ment may be executed in any number ot counterparts and by dif-
ferent parties hereto in separate counterparts, each of which
when so executed and delivered shall be deemed to be an origi-
nal and all of which taken together shall constitute one and
the same instrument.
SECTION 14. Governing Law. This Amendment shall be
governed by, and construe n actor ance with, the laws of the
State of California.
WATERFRONT CONSTRUCTION #1,
A CALIFORNIA LIMITED PARTNERSHIP
By: THE WATERFRONT, INC.
General Partner
Byt
Name:
Title:
THE DAI-ICHI KANGYO HANK, LTD.,
LOS ANGELES AGENCY
By$
Name:
Titles
201oos76 o41492 - 1 7 -
f
and with respect to advising the Bank as to its rights and
responsibilities hereunder and thereunder and expenses relating
to the recording of the Modification and issuance of
endorsements to the title policy relating to the Deed of Trust.
In addition, the Issuer shall pay any and all stamp and other
taxes payable or determined to be payable in connection with
the execution and delivery of this Amendment and the other
instruments and documents to be delivered hereunder# and the
Issuer agrees to save the Bank harmless from and against any
and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes.
SECTION 13. Execution in Counter arts. This Amend-
ment may be executed in any number of counterparts and by dif-
ferent parties hereto in separate counterparts, each of which
when so executed and delivered shall be deemed to be an origi-
nal and all of which taken together shall constitute one and
the same instrument.
SECTION 14. Governing Law. This Amendment shall be
governed by, and construed in accordance with, the laws of the
State of California.
20100576 CK1492
WATERFRONT CONSTRUCTION #1,
A CALIFORNIA LIMITED PARTNERSHIP
Byt THE WATERFRONT, INC.
General Partner
By: Gt%
Name:
Titles ^�
nayer Date
THE DAI-ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
By=
Names
Title:
- 17 -
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and with resp«r:t t c) ndv I i r!r-1
to
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P010057cl
and with respect to advising the Bank as to its rights and
responsibilities hereunder and thereunder and expenses relating
to the recording of the Modification and issuance of
endorsements to the title policy relating to the Dead of Trust.
In addition, the Issuer shall pay any and all stamp and other
taxes payable gr determined to be payabig In gflnnutign with
the execution and delivery of this Amendment and the other
instruments and documents to be delivered hereunder, and the
Issuer agrees to save the Bank harmless from and against any
and all liabilities with respect to or resulting from any delay
in paying or omisaion to pay such taxes.
SECTION 13. Execution in Connterparta. ThIN fiend■
ment may be executed in any number of"counterpaarrts and by dif-
ferent parties hereto in separate counterparts, each of which
when -so executed and delivered shall be deemed to be an origi-
nal and all of which taken together shall constitute one and
the same instrument.
SECTION 14. Governin Law. This Amendment shall be
governed by, and construed to accordance with, the laws of the
State of California.
WATERFRONT CONSTRUCTION #11
A CALIFORNIA LIMITED PARTNERSHIP
By: ei NE WATUPRONT 1 INC.
General Partner
By:
Names s
Title:
THE DAI-ICHI XANGYO BANKe LTD.,
LDS ANGELES AGENCY
By:?t�
Na C e �Sllla j i Takehashi
Titlet �=j= Vice preaidant_L a0 nt General Manager
C.op
C!
SCHEDULE "1"
AMOUNTS DUE AND PAYABLE
BY ISSUER
AS OF MARCH 27, 1992
A. INVOICES SENT TO BORROWER WHICH REMAIN OUTSTANDING TO DATE
Invoice
Date of
Invoice
No.
Invoice
Amount
Remarks
43130
2/26/91
$1,412.63
Sent to
Waterfront on
2/28/91
67683
5/16/91
4,640.58
Sent to
Waterfront on
5/24/91
74340
6/25/91
402.00
Sent to
Waterfront on
7/3/91
80434
7/16/91
197.15
Sent to
Waterfront on
7/22/91
TOTAL DUE PILLSBURYs $6.562.36
B. INVOICES PAID BY DKB AND TO BE REIMBURSED BY BORROWER
UPON RESOLUTION OF DEFAULT
Pillsbury Madison and Sutro:
87280 8/9/91 $ 10721.10 $723.58 was paid by Waterfront;
balance of $997.52 was paid by
DKB
88682 9/20/91
95292 10/10/91
101972 10/31/91
102415 11%11/91
102433 November
114872 12/12191
116180 1/7/92
116176 1/16/92
Appraisal Fee:
TOTAL DUE-DKB
1,220.99
43,456.15
215.75
6p408.22
590.30
7,560.40
12,159.72
1,324.38
39.000.00
$112.923
20100576 041492 - 18 -
Exhibit OAN
Agreement
of the
Redevelopment Agency of the City of Huntington Beach
The undersigned, the Redevelopment Agency of the City of
Huntington Beach, hereby (i) agrees to be bound by, and to
perform its obligations under, Section 4(b) of that certain
First Amendment to Credit Agreement dated as of March 31, 1992
(the "Amendment") between Waterfront Construction #11 A
California Limited Partnership, and The Dai-Ichi Kangyo Bank,
Ltd., a Japanese banking corporation acting through its Los
Angeles Agency.
Dated: , 1992
Approved By:
REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
By:
Name:
Titles
20101201
EXHIBIT "B"
WHEN RECORDED MAIL TO:
Pillsbury Madison & Sutro
725 South Figueroa Street, Suite 1200
Los Angeles, California 90017-2513
Attention: Eugene Y. C. Lu, Esq.
FIRST MODIFICATION OF LEASEHOLD
DEED OF TRUST AND SECURITY AGREEMENT
AND FIXTURE FILING AND ASSIGNMENT OF RENTS
(CONSTRUCTION TRUST DEED)
THIS FIRST MODIFICATION OF LEASEHOLD DEED OF TRUST
AND SECURITY AGREEMENT AND FIXTURE FILING AND ASSIGNMENT OF
RENTS (CONSTRUCTION TRUST DEED), dated as of March 31, 2992
(this •Modification"), is entered into between WATERFRONT
CONSTRUCTION Ill A CALIFORNIA LIMITED PARTNERSHIP ("Trustor"),
and THE DAI-ICHI KANGYO BANK, LTD., a Japanese banking
corporation acting through its Los Angeles Agency
("Beneficiary").
RECITALS
A. Trustor executed a Leasehold Deed of Trust and
Security Agreement and Fixture Filing and Assignment of Rents
(Construction Trust Deed), dated as of March 31, 1989, in favor
of Beneficiary, which was recorded on May 11 1989 in the
Official Records of Orange County as Instrument Number 89-
229784 (the "Deed of Trust").
B. Trustor and Beneficiary wish to modify the Deed
of Trust as hereinafter set forth. -
AGREEMENT
1. Section 1.01(e) of the Deed of Trust is hereby.
deleted in its entirety.
2. Section 1.02(q) of the Deed of Trust is hereby
deleted in its entirety.
C"
2010122E
3. Section 1.02 of the Deed of Trust is amended by.
adding the' following new subsection (q):
"(q) Cash Collateral Account. All amounts
deposits y Trustor in Account No. 6817364781
at Metrobank."
4. Section 1.05(a) of the Deed of Trust is amended
by inserting the following language after
"thereof," in line 5 thereof:
"including the First Amendment to Credit
Agreement, dated as of March 31, 1992, between
Trustor and Beneficiary,"
5. To the extent that any provision of the Deed of
Trust conflicts with any of the foregoing provisions of this
Modification, this Modification shall prevail, but in all other
aspects, the Deed of Trust shall remain in full force and
effect and is hereby ratified and confirmed.
6. On and after the date hereof, each reference in
the Deed of Trust to this Deed of Trust," "hereunder,"
"hereof," "herein" or words of like import, and each reference
to the Deed of Trust in the other agreements and documents
delivered in connection with the transactions contemplated by
the Deed of Trust, shall mean and be a reference to the Deed of
Trust as modified hereby. The execution, delivery and effec-
tiveness of this Modification shall not, except as expressly
provided herein, operate as a waiver of any right, power or
remedy of Beneficiary under any such agreement or document or
constitute a waiver of any provision of any such agreement or
document.
7. This Modification may be executed in any number
of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken
together shall constitute one and the same instrument.
G. This Modification shall be governed by and con-
strued in accordance with the laws of the State of California.
20101228
-2-
This Modification has been executed as of the date
first above written.
20101228
WATERFRONT CONSTRUCTION #l,
A CALIFORNIA LIMITED PARTNERSHIP
By: THE WATERFRONT, INC.
General Partner
BY=
Name:
Titles
THE DAI-ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
BY:
Name:
Title:
-3=
STATE OF CALIFORNIA
age
COUNTY OF
On , 1992, before me, ,
a Notary Public in and for the State of California, personally
appeared , personally known to me (or
proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument, and
acknowledged to me that he or she executed the within
Instrument in his or her authorized capacity and that, by his
or her signature on the within instrument, the person or the
entity upon behalf of which he or she acted, executed the
within instrument.
20101228
WITNESS my hand and official seal.
Notary Public in and for said State
ME
STATE OF CALIFORNIA )
Ss.
COUNTY OF }
On , 1992, before me, ,
a Notary Public in and for the State of California, personally
appeared , personally known to me (or
proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument, and
acknowledged to me that he or she executed the within
instrument in his or her -authorized capacity and that, by his
or her signature on the within instrument, the person or the
entity upon behalf of which he or she acted, executed the
within instrument.
20101228
WITNESS my hand and official seal.
Notary Public in and for said State
--5-
17
EXHIBIT "Co
PLEDGE AGREEMENT
This Pledge Agreement (this "Agreement"), dated as of
March 311 1992, is entered into by ROBERT L. MAYER, as
Trustee of The Robert L. Mayer Trust of 1982 (the `Trust"),
dated June 22, 1982, as amended (such Trustee, solely -in ' such
capacity, herein called the "Grantor"), PRUDENTIAL-BACHE
SECURITIES, INC. ("Broker") a'Fd THE DAI-ICHI KANGYO BANK,
LTD., a Japanese bank ng corporation acting through its
Los Angeles Agency (the "Bank").
RECITALS
A. The Bank has entered into a Credit Agreement
dated as of March 31, 1989 (as from time to time amended, the
"Credit Agreement w) with Waterfront Construction f1, A
Caifornia Limited Partnership (the "Obligor"), pursuant to
which the Bank has agreed to extend up to $55,000,000 in
credit to the Obligor. Capitalized terms used but not
defined herein shall have the respective meanings assigned to
them in the Credit Agreement.
B. The Obligor and the Bank are concurrently
herewith entering into a First Amendment To Credit Agreement
(the "Amendment`).
C. The Grantor is concurrently herewith executing a
First Amendment to Cash£low Guaranty (the "Guaranty
Amendment"), which amends that certain Cashflow Guaranty
dated as of May 3, 1989 by Robert L. Mayer in his individual
capacity (as so amended, the "Guara!) "), by which Guaranty
Amendment Grantor shall become a o nt and several guarantor
under the Guaranty of certain obligations of the Obligor
under the Credit Agreement, as more specifically set forth in
the Guaranty.
D. Robert L. Mayer, directly or indirectly,
including through the Trust, owns an interest in the Obligor
equal to 75%.
E. The Trust is the owner of that certain
Securities Account Number AGK-007648-38 (the `Account•) held
by the Broker, Which Account consists of cash and securities.
F. It is a condition precedent to the effectiveness
of the Amendment that the Grantor execute and deliver this
Agreement.
201013M
SECTION 1. Grant of Security. In consideration for
the above, the Grantor hereby assigns and pledges to the
Bank, and hereby grants to the Bank a security interest in,
all of the Grantor's right, title and interest in and to the
following, whether now owned or hereafter acquired (the
"Collateral"):
(a) the Account, all funds held therein, all
securities held therein and all certificates and instruments,
if any, from time to time representing or evidencing the
Account or such securities and all general intangibles
relating to the Account;
(b) all notes, certificates of deposit, deposit
accounts, checks and other instruments from time to time
hereafter delivered to or otherwise possessed by the Bank for
or on behalf of the Grantor in substitution for or in
addition to any or all of the then existing Collateral;
(c) all interest, dividends, cash, instruments
and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or
all of the then existing Collateral; and
(d) all proceeds of any and all of the forego-
ing Collateral (including proceeds that constitute property
of the types described in clause (a), (b) or (c) of this
Section 1) and, to the extent not otherwise included, all
payments under insurance (whether or not the Bank is the loss
payee thereof), or under any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral.
SECTION 2. Security for Obligations. This Agreement
secures the payment of all o gat ons of Grantor now or
hereafter existing under the Guaranty, whether for
reimbursement, principal, interest, fees, expenses or
otherwise, and all obligations of Grantor now or hereafter
_existing under this Agreement (all such obligations of the
Grantor being collectively called the "Grantor Obligations•).
SECTION 3. Grantor Remains Liable. Anything herein
to the contrary notes t stan ng, (a) t e Grantor shall remain
liable under the contracts and agreements included in the
Collateral to the extent set forth therein to perform all of
its duties and obligations thereunder to the same extent as
if this Agreement had not been executed, (b) the exercise by
the Bank of any of its rights hereunder shall not release the
Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral, and
(c) the Bank shall not have any obligation or liability under
the contracts and agreements included in the Collateral by
reason of this Agreement, and the Bank shall not be obligated
to perform any of the obligations or duties of the Grantor
20101301 -• 2 - P
thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
SECTION 4. Re resentations and Warranties. The
Grantor represents and warrants as follows:
(a) The Grantor owns the Collateral free and
clear of any Lien other than the security interest created by
this Agreement and any Lien in favor of the Broker in
connection with the Margin Loan (as defined below). No
effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file
in any recording office, except such as may have been filed
in favor of the Bank relating to this Agreement.
(b) This Agreement creates a valid and per-
fected second -priority security interest in the Collateral
(subject only to the lien of the Broker), securing the
payment of the Grantor obligations, and all filings and other
actions necessary or desirable to perfect and protect such
security interest have been duly taken.
(c) No consent of any other Person, and no
Governmental Action (except such consents as have already
been obtained and such Governmental Action as has already
been taken) is required (i) for the grant by the Grantor of
the security interest granted hereby, (ii) for the execution,
delivery or performance of this Agreement and the Guaranty
Amendment by the Grantor or (iii) for the perfection of or
the exercise by the Bank of its rights and remedies
hereunder.
(d) the Account partially consists of 367,740
shares of stock of [Metrobank, National Association] (the
`Securities") and shares of stock of
(e) the certificates representing the
Securities are in the name of the Broker.
(f) the Securities are publicly traded, have
been registered in accordance with applicable Governmental
Rules, are not restricted and are freely marketable.
SECTION 5. Further Assurances.
(a) The Grantor agrees that from time to time,
at the expense of the Grantor, the Grantor will promptly
execute and deliver all further instruments and documents,
and take all further action, that may reasonably be necessary
or desirable, or that the Bank may reasonably request, in.
order to perfect and protect any security interest granted or
purported to be granted hereby or to enable' the Bank to
exercise and enforce its rights and remedies hereunder with
�._ respect to any Collateral. Without limiting the generality
20101301 3
POO
a
of the foregoing, the Grantor will, at the request of the
( Bank, (i) mark conspicuously each of its records pertaining
to its Collateral with a legend, in form and substance
satisfactory to the Bank, indicating that such Collateral is
subject to the security interest granted hereby; and
(ii) execute and file such financing and continuation
statements, and amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or
as the Bank may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby.
(b) The Grantor hereby authorizes the Bank to
file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the
Collateral without the signature of the Grantor where
permitted by law. A carbon, photographic or other .
reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(c) The Grantor will furnish to the Bank from
time to time statements and schedules further identifying and
describing the Collateral and such other reports in
connection with the Collateral as the Bank may reasonably
request, all in reasonable detail.
SECTION 6. As to Account.
(a) The Grantor shall maintain the Account with
the Broker.
(b) It shall be a term and condition of the
Account, notwithstanding any term or condition to the
contrary in any other agreement relating to the Account and
except as otherwise provided herein, that no amount (except
any amount which is in excess of the sum of (i) $18500,000
(which represents the Margin Loan plus a variable cushion)
and (ii) twice the amount of Grantor's obligations under the
Guaranty remaining from time to time) and no securities or
certificates or other instruments representing the same,
shall be paid or released to or for the account of, or
withdrawn by or for the account of, the Grantor or any other
Person (other than the Bank and other than as specifically
permitted hereunder) from the Account during the
effectiveness of this Agreement.
(c) All certificates or instruments, if any,
representing or evidencing the Collateral and held by the
Broker shall be held by the Broker as agent for and on behalf
of the Bank. The Broker hereby agrees to hold such
certificates or instruments as agent for the Bank.
(d) So long as no Event of Default has occurred
�r and is continuing and except as specifically provided in the
20101301 - 4 -
ti
Guaranty and in this Agreement, the Grantor shall control the
( ordinary activities in the Account, including trading in
securities; provided, that such activities are not intended
to deplete the value of the Account.
(e) The Broker hereby agrees to deliver to the
Bank a copy of each monthly statement sent to the Grantor
with respect to the Account at the same time such statement
is sent to the Grantor, and the Grantor hereby consents to
such agreement by the Broker.
(f) So long as no Event of Default has occurred
and is continuing, the Broker may pay, and the Grantor may
receive, dividends payable with respect to securities in the
Account.
SECTION 7. Transfers and Other Liens. The Grantor
shall not:
(a) sell, assign (by operation of law or other-
wise) or otherwise dispose of, or grant any option with
respect to, the Grantor's ownership interest in any of the
Collateral (other than as permitted under Section 6(d)
above); or
(b) create or suffer to exist any Lien upon or
with respect to any of the Collateral to secure the debt of
any Person, except for the security interest created by this
Agreement and except as specifically permitted hereunder.
SECTION 8. Agreement Regarding Interest in and
Disposition of Collateral. The Grantor, the Bank ana the
Broker hereby agree and acknowledge as followst
(a) the Broker has committed to make a margin
loan to the Grantor up to but not exceeding the lesser of (i)
$1,100,000 and (11) 30t of the total value of the Account
(the "Margin Loan"), which Margin Loan is secured by a first -
priority lien in the Account;
(b) the Broker retains the first right to
liquidate securities in the Account in the event of a margin
call and to debit the Account for margin interest and
commissions; and
(c) if at any time the value of the Securities
in the Account decreases so that the Margin Loan is no longer
less than or equal to 30% of the total value of the Account,
then either (i) the Grantor shall pay to the Broker such
amount as is necessary to reduce the Margin Loan to a level
where it is less than or equal to 30% of the total value of
the Account or (ii) the Broker shall sell such portion of the
securities in the Account to achieve the same result as (i)
above.
20101MI - 5
r
SECTION 9. Bank A2201nted Attorney -in -Fact. The
Grantor hereby irrevocably appoints, eftective from and
after, and during the continuance of, an Event of Default,
the Bank the Grantor's attorney -in -fact, With full authority
in the place and stead of the Grantor and in the name of the
Grantor or otherwise, from time to time in the Bank's
discretion, to take any action and to execute any instrument
that the Bank may deem necessary or advisable to accomplish
the purposes of this Agreement, including the followings
(a) to ask for, demand, collect, sue for,
recover, compromise, receive and give acquittance and
receipts for moneys due and to become due under or in respect
of any Collateral;
(b) to receive, endorse and collect any drafts
or other instruments, documents or chattel paper in
connection with clause (a) above; and
(c) to file any claims, take any action or
institute any proceedings that the Bank may deem necessary or
desirable for the collection of any of the Collateral or
otherwise to enforce the rights of the Bank with respect to
any of the Collateral.
SECTION 10. Bank_.M&X Perform. If the Grantor fails
to perform any agreement contained erein, the Bank may, upon
written notice to the Grantor, itself perform, or cause
performance of, such agreement, and the reasonable expenses
of the Bank incurred in connection therewith shall be payable
by the Grantor under Section 13(b).
SECTION 11. Bank's Duties. The powers conferred on
the Bank hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Bank shall have no
duty as to the Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or
any other rights pertaining to the Collateral. The Bank
shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession
if such Collateral is accorded treatment substantially equal
to that that the Bank accords its own property.
SECTION 12. Remedies. If the Obligor fails to pay
any of the Obligations (as defined in the Guaranty) at any
time and subject to Section 19 of the Guarantys
(a) Subject to Section 8(b), on and after
January 1, 1993, the Bank may, upon notice to the Broker,
�! without notice to the Grantor except as required by law and
zoo M
Mof
at any time or from time to time, charge, set off, liquidate
the securities in, withdraw from and otherwise apply all or
any part of the Collateral, without limitation, against the
Grantor Obligations or any part thereof; provided, that the
Bank agrees to sell no more than 12,500 shares �of the
Securities every 30 days (other than shares of Securities
sold pursuant to Section 8(c)(ii) hereof), provided4r further,
that the Bank agrees not to sell any other securities in the
Account until after all the Securities have been sold. Upon
written notice to the Broker, with a copy to the Grantor, the
Grantor shall have no further control over the Account and
activities in the Account or With respect to the Collateral,
including trading in the Securities, and such control shall
be exercised by the Bank in its sole discretion. The Broker
hereby agrees to abide by any written notice received
pursuant to this Section 12(a), and to, forthwith upon
receipt of such notice, promptly sell, at the then current
market price
, such number of the Securities as is necessary to satisfy
the Grantor's payment obligation set forth in such notice
and, upon such sale, to promptly forward to the Bank the
proceeds of such sale.
(b) The Bank may exercise in respect of the
Collateral, in addition to other rights and remedies provided
for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform
Commercial Code (the "Code") (whether or not the Code applies
to the affected Collatera ). The Grantor agrees that, to the
extent notice of sale shall be required by law, at least
10 days' notice to the Grantor of the time and place of any
public sale or the time after which any private sale is to be
made, such public or private sale conducted by the Broker as
provided in (a) above, shall constitute reasonable
notification. The Bank shall not be obligated to make any
sale of the Collateral regardless of notice of sale having
been given. The Bank may adjourn any public or private sale
from time'to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned.
(c) Any cash held by the Bank as Collateral and
all cash proceeds received by the Bank in respect of any sale
of, collection from or other realization upon all or any part
of the Collateral may, in the discretion of the Bank, be held
by the Bank as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to
the Bank pursuant to Section 13) in whole or in part by the
Bank against, all or any part of the Obligations in such
order as the Bank may elect. Any surplus of such cash or
cash proceeds held by the Bank and remaining after payment in
full of the Grantor obligations shall be paid over to the
rY1 Grantor or other Person lawfully entitled to receive such
�.surplus.
20101301
:WM
SECTION 13. Indemnity and Expenses.
(a) The Grantor agrees to indemnify the Bank
from and against any and all claims, losses and liabilities
growing out of or resulting from this Agreement (including
enforcement of this Agreement), except claims, losses or lia-
bilities resulting from the Bank's gross negligence or
willful misconduct.
(b) The Grantor will upon demand pay to the
Bank the amount of any and all reasonable expenses, including
the reasonable fees and disbursements of its counsel and of
any experts and agents, that the Bank may incur in connection
with (i) the administration of this Agreement, (ii) the
custody, preservation, use, operation of, sale of, collection
from or other realization upon any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the
Bank hereunder or (iv) the failure by the Grantor to perform
or observe any of the provisions hereof. The Grantor hereby
agrees that any and all of the expenses set forth above are
payable from the proceeds of the Account, and hereby directs
the Broker to pay all such expenses from the Account upon
demand by the Bank. The Broker hereby agrees to abide by the
foregoing sentence.
SECTION 14. Amendments Etc. No amendment or waiver
of any provision of tFIs Agreement or consent to any
departure by the Grantor here from shall in any event be
effective unless the same shall be in writing and signed by
the Bank, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose
for which given.
SECTION 15. Addresses for Notices. All notices and
other communications provide or ereun er shall be in
writing (including communication by telecopier) and shall be
mailed, telecopied or delivered to the parties hereto, at the
addresses or telecopier numbers therefor set forth below, or
at such other address or telecopier number as shall be
designated by such party in a written notice to the other
parties complying as to delivery with the terms of this
Section 15. All such notices and other communications shall,
when mailed or telecopied, be effective 72 hours after being
deposited in the mails or when received, respectively,
addressed as aforesaid.
20101301 - -
Grantor: c/o Waterfront Construction !1,
A California Limited Partnership
660 Newport Center Drive
Suits 1050
Newport Beach, California 92660
Attns Mr. Robert L. Mayer
Telecopiers (714) 720-1017
Banks 170 Wilshire Boulevard
Los Angeles, California 90017
Attns Mr. Dan Dawes,
Business Development
Department 2
Telecopiers (213) 612-5258
Broker: 72-027 Highway 111
Rancho Mirage, California 92270
Attn: Mr, Ronald G. See
Telecopier: (619) 341-9346
SECTION 16. Continuing Security Interest. This
Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in effect until payment in
full of the Grantor Obligations whereupon it shall terminte,
(ii) be binding upon the Grantor and its successors and
assigns and (iii) inure, together with the rights and
remedies of the Bank hereunder, to the benefit of the Bank
and its successors, transferees and assigns. Without
limiting the generality of the foregoing clause (ifi), the
Bank may assign or otherwise transfer any of its rights and
obligations under the Guaranty and the other Operative
Agreements to any other Person, and such other Person shall
thereupon become vested with all of the benefits in respect
thereof granted to the Bank herein or otherwise.
SECTION 17. Broker Bound. The Broker hereby
acknowledges the security interest granted in this Agreement
and agrees to abide by and be bound by the provision of this
Agreement. The Broker represents that, to its knowledge,
there have been no previous security interests granted in,
assignments of or claims made against the Collateral.
SECTION 19. Governin Law; Terms. This Agreement
shall be governed by and construed in accordance with the
laws of the State of California. Unless otherwise defined
herein or in the Credit Agreement, terms used in Article 9 of
the California Commercial Code are used herein as therein
defined.
SECTION 19. Broker Held Harmless. The Broker and
its officers, directors ana employees s all not be liable,
and the Grantor and the Bank hold the Broker harmless, for
any action or inaction of the Broker When acting or not
L ' acting pursuant to instructions from the Grantor or the Bank
20101301 - 9
in compliance with this Agreement, except for the Broker's
gross negligence or willful misconduct.
SECTION 20. Grantor Bound. The Grantor hereby
agrees to abide by ana be bound y the provisions of
Section 4(a)(i) of the Amendment.
Grantor:
ROBERT L. MAYER,
as Trustee of The
Robert L. Mayer Trust of 1982,
dated June 22, 1982, as amended
Brokers PRUDENTIAL-BACHE SECURITIES, INC.
By:
Names
Title:
Bank: THE DAI-ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
By:
Name:
Title:
Acknowledged and Consented to by:
ROBERT L. MAYER,
as Trustor and Beneficiary
of The Robert L. Mayer
Trust of 1982, dated June 22, 1982,
as amended
10 -
ti
EXHIBIT "D*
FIRST AMENDMENT TO CASHFLOW GUARANTY
This First Amendment to Cashflow Guaranty (the
"Amendment"), dated as of March 31, 1992, is entered into
among Robert L. Mayer, an individual (*RM"), Robert L. Mayer
as Trustee of the Robert L. Mayer Trust of 19828 dated
June 22, 1982 (the "Trust"), as amended (in such capacity,
the *Trustee" and together with RM, the "Guarantor") and The
Dai-Ichi Kangyo Bank, Ltd., Los Angeles Agency (the "Bank").
Recital
A. RM has executed a Cashflow Guaranty dated May 3,
1989 (the `Guaranty") in favor of the Bank, guaranteeing
certain obligations of Waterfront Construction #1, A
California Limited Partnership (the *Obligor") under that
certain Credit Agreement dated as of March 31, 1989 between
the Obligor and the Bank (the "Credit Agreement*).
B. The Obligor is concurrently herewith entering into
a First Amendment to Credit Agreement with the Bank (the
"First Amendment").
C. The parties hereto wish to add the Trustee to the
Guaranty as a joint and several "Guarantor.*
D. The Trustee is concurrently herewith entering into
a pledge agreement (the "Pledge Agreement*) with the Bank and
Prudential-Bache Securities, Inc. in order to secure its
obligations under the Guaranty, as amended hereby.
E. The Bank has agreed that the Guaranty shall be non -
recourse with respect to the Trustee or the Trust or their
assets, except such assets of the Trustee or the Trust as are
encumbered by the Pledge Agreement.
F. The Bank has also agreed, as more accurately set
forth below and subject to the conditions set forth below, to
pursue its remedies under the Guaranty and the Pledge
Agreement in a certain order, provided that the -Guaranty
shall continue to be full recourse (subject to the limitation
set forth in the Guaranty) with respect to RM.
NOW, THEREFORE, in consideration for the above and as a
condition precedent to the effectiveness of the First
20101491
Amendment, the parties hereto wish to amend the Guaranty as
set forth below.
SECTION 1. Amendments to Guaranty The Guaranty
is, effective as of the ate hereof 0 hereby amended as
follows:
(a) The words "Dated as of March 31, 1989"
are hereby deleted from the top of the first page of the
Guaranty.
(b) The first paragraph of the Guaranty is
hereby amended in its entirety to read as follows:
"ROBERT L. MAYER for himself in his individual
capacity ('RM') and ROBERT L. MAYER AS TRUSTEE
OF THE ROBERT L. MAYER TRUST OF 1982 (the
'Trust'), dated June 22, 1982, as amended (in
such capacity, the 'Trustee' and together with
RM, the 'Guarantor'), in order to induce THE
DAI-ICHI KANGYO BANK, LTD., LOS ANGELES AGENCY
(the 'Bank') to issue letters of credit for
the account of, and to extend loans to,
WATERFRONT CONSTRUCTION #11 A CALIFORNIA
LIMITED PARTNERSHIP (the 'Obligor') pursuant
to the Credit Agreement dated as of March 31,
1989 between the Obligor and the Bank, as
amended by the First Amendment to Credit
Agreement dated as of March 31, 1992 (as so
amended, the 'Credit Agreement'), hereby,
jointly and severally, unconditionally_and
irrevocably guarantees, as a continuing
obligation, to the Bank that with effect from
Completion of Construction of, and the
issuance of the certificate of occupancy for,
the Project (the 'Effective Date') the Obligor
will pay when due all Obligations (as
hereafter defined) to the Bank at 770 Wilshire
Boulevard, Los Angeles, California 90017, or
at any other place designated by the Bank to
the Obligor in writing, and that, if for any
reason the Obligor does not make such payment
on or after the Effective Date, the Guarantor
shall, jointly or severally, pay the
Obligations upon first demand by the Bank in
accordance with the following terms:"
(c) The following new Sections 16, 171 18 and
19 are hereby added to the Guaranty:
2DIM 491
- 2 -
201OU91
"16. Joint and Several Liability. The
liability of Rx-and the Trustee ereunder shall be
joint and several.•
017. Security. The joint and several
obligations ofthe Trustee under this Guaranty are
secured by that certain Pledge Agreement dated as
of March 31, 1992 (the 'Pledge Agreement') among
the Trustee, the Bank and Prudential-Bache
Securities, Inc. (the 'Broker')."
118. Non -Recourse Against Trustee
and Trust. T s Guaranty shall a non -
recourse with respect to the Trustee, the
Trust and their assets, except such
assets of the Trustee and the Trust as
are encumbered by the Pledge Agreement.
This Guaranty, subject to Section 19
below, shall continue to be full -recourse
(subject to the limitation set forth in
this Guaranty) with respect to RM and his
assets*,
019. Bank's Agreements. The Bank hereby
agrees that so long as no Event of Default (as
defined in the Credit Agreement) has occurred
and is continuing, the Bank shall (i) not
demand payment from the Guarantor hereunder
prior to January 1, 1993 and (ii) on and after
January 1, 1993, first pursue its remedies
under the Pledge Agreement to satisfy any
payment obligations of the Guarantor hereunder
and not pursue RM under this Guaranty until
such time as the Bank has exhausted its
remedies under, and as provided in, the Pledge
Agreement; prided, that if either of the
following conc�ftro_ns exist, then the Bank
shall not be bound by this Section 191
(a) after giving written notice to the Broker
and the Trustee pursuant to Section 12(a) of
the Pledge Agreement, the Bank is for any
reason, other than due to its own
unwillingness or gross negligence, unable to
liquidate the Securities (as defined in the
Pledge agreement) and such inability
continues for a period of five (5) business
days after such written notice is given, or
(b) the fair market value of the Securities
and other property in the Account (as defined
in the Pledge Agreement) is less than the sum
of (1) $500,000 and (ii) such value as is
necessary to avoid a margin call by the
- 3 -
�- Broker, or (c) the difference between (i) the
fair market value of the Securities and other
property in the Account and (ii) the Broker's
Margin Loan (as defined in the Pledge
Agreement) is less than the greater of (A)
$500,040 and (B) the amount of the then
remaining Obligations under the Guaranty."
SECTION 2. Reference to Guarantor. From and after
the effectiveness of this Amend ent, a re erences in the
Guaranty to Guarantor shall collectively mean RM and the
Trustee, as jointly and severally liable.
SECTION 3. Conditions of Effectiveness. This
Amendment shall become a ect ve when and if t e First
Amendment becomes effective.
SECTION 4. Re resentations and Warranties.
(a) Due Ca acit The execution, delivery
and performance oft s Amen ent are within the Guarantor's
legal capacity, except as disclosed in writing to the Bank,
do not contravene any law or contractual restriction binding
on or affecting the Guarantor, and do not result in or
require the creation of any lien upon or with respect to the
Guarantor's properties other than as created herein.
(b) Governmental Approvals. No
authorization, approval or other act on y, and no notice to
or filing With, any governmental authority or regulatory body
is required for the due execution, delivery and performance
by the Guarantor of this Amendment, except such action as has
already been obtained.
(c) Binding Effect. This Amendment is the
legal, valid and binding obligation of the Guarantor
enforceable against the Guarantor in accordance with the
terms hereof, subject to the effect of bankruptcy,
insolvency, reorganization, fraudulent conveyance,
preferential transfer, moratorium and other similar laws
limiting the enforceability of creditors' rights generally
and subject to limitations imposed by equitable principles
upon the availability of the remedy of specific performance,
injunctive relief or other equitable remedies.
(d) Litigation. Except for actions or
proceedings institute y J.A. Jones Construction Company,
there is no pending or threatened action or proceeding
affecting the Guarantor before any court, governmental agency
or arbitrator that may materially adversely affect the
financial condition of the Guarantor or the ability of the
20101491
— 4
Guarantor to perform his obligations under the Guaranty as
amended by this Amendment.
(e) Financial Statements. RM's most recent
unaudited annual financ a statements and statement of assets
and liabilities, and income tax returns, copies of which have
been furnished to the Bank, fairly present the financial
condition of RM at such dates and the results of his
operations for the periods ended on such dates.
SECTION 5. Reference to and Effect on the
Guarani.
(a) Upon the effectiveness of Sections 11 on
and after the date hereof each reference in the Guaranty to
"this Guaranty," "hereunder," "hereof," "herein• or words of
like Import, and each reference in any other written
agreement to the Credit Guaranty, shall mean and be a refer-
ence to the Guaranty as amended hereby.
(b) Except as specifically amended above, the
Guaranty shall remain in full force and effect and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness
of this Amendment shall not, except as expressly provided
herein, operate as a waiver of any right, power or remedy of
any Bank under the Guaranty or constitute a waiver of any
provision of the Guaranty.
SECTION 6. Execution in Counterparts. This Amend-
ment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an
original and all of which taken together shall constitute one
and the same instrument.
201014"
- 5 -
fe
SECTION 7. Governing Law. This Amendment shall be
governed by, and construe n accordance with, the laws, of
the State of California.
SECTION S. Sasco Electric and Guaranty. RM hereby
agrees that any amounts paid by RM to settle the claims of
Sasco Electric shall not reduce, and are in addition to,
RM's obligations under the Guaranty, as amended hereby.
Guarantor:
Guarantor:
ROBERT L. MAYER
ROBERT L. MAYER,
Trustee of the Robert L. Mayer
Trust of 1982, dated June 22,
1982, as amended
Bank: THE DAI--ICHI KANGYO BANK, LTD.
r Los Angeles Agency
20101491
By:
Name:
Title:
- 6 -
EXHIBIT "E"
NOTICE OF SECURITY INTEREST
IN ACCOUNT
Ms. Sharon Canup
Metrobank
10900 Wilshire Boulevard
Los Angeles, California 90024
NOTICE IS HEREBY GIVEN to Metrobank that The Dai-Ichi
Kangyo Bank, Ltd., Los Angeles Agency ("Bank"), as Beneficiary
under the Leasehold Deed of Trust and Security Agreement and
Fixture Filing and Assignment of Rents (Construction Deed of
Trust), dated as of March 31, 1989, by Waterfront Construction
#I, A California Limited Partnership (•Borrower*), as Trustor,
as modified by the First Modification of Deed of Trust and
Security Agreement and Fixture Filing and Assignment of Rents
(Construction Trust Deed), dated as of March 31, 19921 between
Borrower and Bank, holds a security interest in Account
No. 681-364781 in the name of Borrower held with Metrobank.
This Notice is given pursuant to California
Commercial Code Section 9302(1)(g)(ii) in order to perfect a
security interest in the above -referenced account.
Dated:
THE DAI-ICHI KANGYO BANK, LTD.,
Los Angeles Agency
Bys
Names
Title:
Acknowledged by:
METROBANX
By.
Names
Title:
20123899 041492
EXHIBIT "F"
ASSIGNMENT OF OPERATING AGREEMENT
AND SUBORDINATION AGREEMENT AND AMENDMENT
THIS ASSIGNMENT OF OPERATING AGREEMENT AND SUBORDINATION
AGREEMENT AND AMENDMENT (this "Agreement") dated as of
March 31, 19920 is made by WATERFRONT CONSTRUCTION #11 A
California Limited Partnership (the "Owner"), DESTINATION
PROPERTIES, INC., a California corporation (the "Operator"),
and THE DAI-ICHI KANGYO BANK, LTD., Los Angeles Agency (the
"Bank"). All definitional terms used without definition herein
have the same meanings assigned to them in the Credit Agreement
described below.
RECITALS
A. The Owner and the Bank have entered into a Credit
Agreement dated as of March 31, 1989, as amended by the First
Amendment to Credit Agreement (the "First Amendment") dated as
of March 31, 1992 (as so amended, the "Credit Agreement"),
pursuant to which the Bank provided a loan and letter of credit
facility up to the maximum aggregate principal amount of
$55,000,000 to finance the construction costs of the Project.
The Owner has executed a Leasehold Deed of Trust and Security
Agreement and Fixture Filing and Assignment of Rents
(Construction Trust Deed) dated as of March 31, 1989 and
recorded on May 1, 1989 in the Official Records of Orange
County as Instrument No. 89-229784, as modified by the First
Modification to Leasehold Deed of Trust and Security Agreement
and Fixture Filing and Assignment of Rents (Construction Trust
Deed) dated as of March 31, 1992 (as so modified, the 'Deed of
Trust"), encumbering certain real property in Huntington Beach,
California more particularly described in Exhibit "A' to the
Deed of Trust (the "Land") and certain personal property
related thereto.
B. The Owner and the Operator have entered into a Hotel
Management and Operating Agreement dated as of January 2, 1991,
as amended hereby (the "Operating Agreement"), pursuant to
which the Operator has been engaged to manage and operate the
hotel complex commonly known as "The Waterfront Hilton" and
located on the Land (the "Hotel" and together with the Land,
the "Property").
C. This Agreement is being entered into as a condition
precedent to the effectiveness of the First Amendment.
20102343 041492
NOW THEREFORE, in consideration of the foregoing facts and
mutual covenants contained herein, the parties hereto agree as
folloxss
Section 1. Assignment. The Owl
transfers to the Banc, its successors
purposes only, all of the Owner's ric
the Operating Agreement. Subject to
set forth herein, the Operator hereby
assignment and to such action as may
hereunder. Neither this assignment i
on the part of the Bank shall constil
Bank of any of the Owner's obligatiot
Agreement unless the Bank shall have
the Operator of its election, subject
Section 6 hereof, to commence operatJ
following an uncured Event of Defaull
Credit Agreement. The Owner shall cc
all obligations under the Operating I
hereby agrees to perform all of such
or a third party purchaser has obtair
either through foreclosure or otherw]
provisions of Section 6 hereof, upon
of Default under the Credit Agreement
er hereby assigns and
and assigns, for security
ht, title and interest in
the terms and provisions
consents to such
be taken by the Bank
or any action or actions
ute an assumption by the
s under the Operating
given written notice to
to the provisions of
on of the Property
by the Owner under the
ntinue to be liable for
greement and the Owner
obligations until the Bank
ed title to the Property
se. Subject to the
the occurrence of an Event
, the Bank may elect to
reassign its rights under the Operating Agreement to any person
or entity selected by the Bank. The Bank shall have no right
to enforce the provisions of the Operating Agreement until
there shall exist an Event of Default under the Credit
Agreement. Upon the occurrence of an Event of Default by the
Owner under the Credit Agreement, the Bank may, without
affecting any of its rights or remedies against the Owner under
any other instrument, document or agreement, exercise its
rights under this Agreement as the Owner's attorney in fact
(which appointment is coupled with an interest and is
irrevocable) or in any other manner permitted by law, and in
addition the Bank shall have and possess, without limitation,
any and all rights and remedies of a secured party provided at
law or at equity.
Section 2. Subordination. During the term of the Credit
Agreement and sub ect to t e provisions of this Section and
Section 6 below, the right of the Bank to complete repayment of
(i) all Loans and LOC Disbursements, (ii) any credit extended
pursuant to the Credit Agreement, and (iii) any renewals and
extensions. thereof, shall unconditionally be and remain at all
times prior and superior to the interests of the Operator under
the Operating Agreement to the extent that the "Incentive
Management Fee" and any portion of the "Base Management Fee"
(as such terms are defined in the Operating Agreement) have not
been or shall not be paid by the Owner to the Operator, during
both the 1991 and 1992 calendar years. Notwithstanding
20102343 011492 - 2 -
PIP
anything set forth herein to the contrary, during the term of
the Credit Agreement, the Base Management Fee (as reduced
pursuant to Section 3 below), shall be paid currently to the
Operator so long as the Operating Agreement remains in full
force and effect.
Section 3. Amendment.
(a) The Owner and the Operator hereby amend
Section 8.1.1 of the Operating Agreement in its entirety to
read as follows:
08.1.1 For each month during the Operating Term (and
proportionately for any fraction of a month), Owner
shall pay to Operator for services rendered under
this Agreement, a Base Management Fee equal to three
percent (3%) of Gross Revenue during the 1992
calendar year and equal to four percent (0) of Gross
Revenue thereafter, payable monthly. The Base
Management Fee shall be a deduction."
(b) Except as amended hereby, the Operating Agreement
shall remain in full force and effect and is hereby ratified.
(c) On and after the date hereof, any reference in the
Operating Agreement or any other agreement to 'Agreement,*
"hereunder," "herein," "hereof," or words of the like import
referring to the Operating Agreement shall mean and be a
reference to the Operating Agreement as amended hereby.
Section 4. Representations and warranties of the Owner
and the Operator.
(a) The Operator represents and warrants to the Bank
that: (i) the Operator has all requisite power and authority
to execute and deliver, and to perform all of its obligations
under, the Operating Agreement and this Agreement; (ii) the
execution and delivery by the Operator of, and the performance
by the Operator of each of its obligations under, the Operating
Agreement and this Agreement have been duly authorized by all
necessary action and do not and will not require any
authorization, consent, approval, order, license, permit or
exemption from, or filing, registration or qualification with,
any governmental agency or other person or entity that has not
already been obtained; and (iii) the rights' and interests of
the Operator arising under the Operating Agreement do not give
rise to a Lien or other similar interest in favor of Operator
against the Property.
(b) The Operator and the Owner represent and warrant to
the Bank that: (i) true and complete copies of the Operating
( Agreement have been delivered to the Bank; (ii) the Operating
20102343 041492 - 3
Agreement constitutes the entire agreement between the Owner
and the Operator relating to the management and operation of
the Property; (iii) the Operating Agreement is genuine, valid
and enforceable in accordance with its terms, is in full force
and effect with no defaults thereunder and has not been
supplemented, modified or amended in any respect; (iv) no event
has occurred that would constitute a default under the
Operating Agreement upon the giving of notice or a lapse of
time or both, and neither the Operator nor the Owner has any
defenses, offsets or counterclaims to the enforcement of the
Operating Agreement or any interest thereon.
Section 5. Covenants of the Owner and the Operator.
(a) The Owner and the Operator agree that (i) no
Incentive Management Fee shall be paid during the 1992 calendar
year, (ii) the Base Management Fee payable during the 1992
calendar year shall only be paid at the reduced rate set forth
in Section 3, (iii) such Incentive Management Fee and such
unpaid portion of the Base Management Fee, together with any
accrued and unpaid Incentive Management Fee and Base Management
Fee for the 1991 calendar year, shall remain unpaid and
subordinated pursuant to Section 2 and (iv) the Bank shall have
no obligation to pay any accrued and unpaid Incentive
Management Fee or Base Management Fee.
(b) The Owner agrees that, unless the Bank otherwise
consents in writing: (i) the Owner will perform all
obligations on its part to be performed under the Operating
Agreement, and will take all action reasonably necessary to
maintain the Operating Agreement in full force and effect;
(ii) the Owner will, at its sole cost and expense, enforce the
Operating Agreement in accordance with the terms thereof and,
upon an uncured event of default under the Operating Agreement,
or upon an event which, with notice or the passage of time or
both, would constitute an event of default under the Operating
Agreement, the Owner will, at its sole cost and expense,
enforce the Operating Agreement as the Bank may require, and
take or refrain from taking such action in connection therewith
as the Bank may require; and (iii) the Owner will, at its sole
cost and expense, defend any action in any manner connected
with the Operating Agreement•or any obligations thereunder.
(c) The Operator agrees that, unless the Bank otherwise
consents in writing, the Operator will perform all obligations
on its part to be performed under the Operating Agreement.
(d) The Owner and the Operator agree that, unless the
Bank otherwise consents in writing and except as otherwise
provided in this Agreement: (i) no material alteration,
supplement, extension, renewal, release, termination, or waiver
shall be made or shall be effective, nor shall any material
20102343 041492 — 4
agreement or consent be entered into or given with respect to
the Operating Agreement or any material condition, covenant,
default, remedy, right, representation or term thereof or
thereunder or any person obligated thereon (provided, however,
copies of all modifications to the Operating Agreement, whether
material or otherwise, shall be forwarded to the Bank); (ii) no
prepayment of any amount due to the Owner or the Operator under
the Operating Agreement shall be made or accepted;
(iii) neither the Owner nor the Operator shall further assign,
encumber or otherwise transfer the Operating Agreement or any
interest therein; and (iv) the Owner and the Operator will each
promptly deliver to the Bank copies of any notices of default
sent or received by the Owner or the Operator under the
Operating Agreement and in any event will give the Bank prompt
written notice of any default or alleged default thereunder.
(e) Notwithstanding any provisions in the Operating
Agreement to the contrary, Operator shall submit the proposed
draft Annual Plan (as defined in the Operating Agreement) and
any subsequent revisions to the Bank concurrently With its
submission to the Owner, for the Bank's prior written approval.
The Bank shall approve or disapprove of the Annual Plan within
the same time given to the Owner for response pursuant to
Section 4.1.2 of the Operating Agreement. If the Bank fails to
respond within such period, the Annual Plan shall be deemed
approved. If the parties shall fail to approve an Annual Plan
for any fiscal year, pending resolution of any dispute in
connection with the Annual Plan between the Owner, the Bank and
the Operator (which all parties shall conduct in good faith),
the Operator shall operate the Property during such succeeding
fiscal year with the same level of service (including
expenditure for furniture, fixtures and equipment) as it had
operated the Property during the previous fiscal year with such
reasonable modifications and changes as required by the then
existing economic and market conditions. Notwithstanding any
provisions in the Operating Agreement to the contrary, the
Operator and the owner shall not cause or permit any
expenditure in excess of the amount set forth in any approved
Annual Plan except in the case of an emergency. (If an
expenditure occurs during an emergency, the Operator or the
Owner shall provide to the Bank within two days after the date
of such expenditure written notice of the expenditure and a
reasonably detailed description of the nature of the
emergency).
(f) The Operator agrees that upon the Bank's acquiring
title to the Property or upon the appointment of a receiver
pursuant to the terms of the Deed of Trust, the Owner or the
Operator shall immediately deliver to the Bank (i) originals of
all of the alcoholic beverage licenses issued for the continual
operation of the Property and will cooperate with the Bank to
effectuate a full assignment, conveyance and transfer of such
20102343 041492 " 5 F
gpp
. . .
alcoholic beverage licenses (which assignment, conveyance and
transfer shall be approved and consented to by the Department
of Alcoholic Beverage Control and by any other applicable
agencies), so that the smooth and continual operation of the
Property is not impaired or hindered, and (ii) all room keys
and lock combinations to the Property.
Section 6. Transfer of Real Property. If the Bank
acquires the Owner's interest in the Property, the Bank shall
give notice to the Operator. The Bank may, at any time after
such acquisition and upon ten (10) days prior written notice to
the Operator, terminate the Operating Agreement and all of the
rights of the Operator thereunder. The Bank agrees to
reimburse the Operator for such actual costs incurred by the
Operator and verified in writing to the Bank after such
termination, in connection with a payout or relocation or other
out-of-pocket expenses not to exceed $100,000 in the aggregate.
Unless the Bank exercises its right to terminate the Operating
Agreement , the Operating Agreement and the Operators rights
thereunder shall continue in full force and effect. For the
period of time that the Operating Agreement continues in full
force and effect, the Operating Agreement shall not be altered,
terminated or discharged, except in accordance with the terms
of the Operating Agreement or as set forth in this Section 6 or
in Section 7 hereof, and the Operator shall be bound to the
Bank under all the terms, covenants and conditions of the
Operating Agreement for the balance of the term and any
renewals thereof, with the same force and effect as if the Bank
were the owner under the Operating Agreement. The Bank and the
Operator shall not be (i) liable for any act or omission of the
Owner under the Operating Agreement, (ii) liable for or
obligated to cure any defaults of the Owner under the Operating
Agreement which occurred prior to the transfer of the Property
to the Bank, (iii) subject to any offsets or defenses, .
including, without limitation, the benefit of any prepayments
made, which the Operator may be entitled to assert against the
owner, or (iv) bound by any amendment or modification of the
Operating Agreement made without the consent of the Bank. Upon
termination of the Operator as set forth hereinabove or in
Section 7 hereof, Operator shall use good faith efforts to
assist the Bank in any reasonable manner to provide any orderly
transition to a new manager.
Section 7. Termination Due to Acts of the Operator.
Notwithstanding anything set forth in Sect -Lon 6-iere�to the
contrary, in the event a Default occurs and is continuing, and,
in the reasonable judgment of the Bank, such Default is a
result of the actions or inactions of the Operator, then the
Bank,may terminate or cause to be terminated the Operating
Agreement and all rights of the Operator thereunder, if any.
20102343 041492 6 -
WA
1
Section G. The Bank Bound. Subject to the provisions of
Sections 6 and 7 hereof, If the Bank shall succeed to the
interests of the Owner under the Operating Agreement, the Bank
shall be bound to the Operator under all of the terms,
covenants and conditions of the Operating Agreement, and the
Operator shall, from and after the Bank's succession to the
interests of the Owner under the Operating Agreement, have the
same remedies against the Bank for the breach of any provision
contained in the Operating Agreement that the Operator might
have had under the Operating Agreement against the Owner if the
Bank had not succeeded to the interests of the Owner under the
Operating Agreement.
Section 9. Termination By Operator. The Operator agrees
that in the event o any default by the Owner under the
Operating Agreement, the Operator will give written notice to
the Bank thereof and the Bank shall have the right, but not the
obligation, to cure such default within 60 days from the Bank's
receipt of such notice, notwithstanding any different grace
period provided in the Operating Agreement.• Subject to the
provisions of Section 7 above, the Operator agrees not to
terminate its performance under the Operating Agreement unless
such 60 day period has expired without a cure of the default by
either the Bank or the Owner, or without the Bank or the Owner
commencing and diligently pursuing such cure to completion.
Section 10. Security Interest in Receivables. The Owner
has granted the DaW a security interest pursuant to the Deed
of Trust in all accounts receivable and all rights of the Owner
to payment for room rentals, food and beverage operations or
otherwise with respect to the Owner's interest in the Property
or any proceeds thereof. Operator hereby acknowledges such
security interest and agrees, for the benefit of the Bank, that
upon its receipt of a notice of the occurrence of a Default (a
"Notice of Default), all such accounts receivable and proceeds
thereof (including but not limited to all cash held by the
Operator under the Operating Agreement in the Hotel Bank
Account, as defined in the Operating Agreement) or any hotel
operating accounts as funds available for distribution payable
to the Owner) will be held in trust for the Bank or turned over
to the Bank, as the Bank shall direct. The Owner hereby
authorizes and directs the Operator, after the Operator's '
receipt from the Bank of a Notice of Default, to act in
accordance with any instructions received from the Bank with
respect to the holding of any such accounts receivable and the
proceeds thereof in trust for the benefit of the Bank and to
turn the same over to the Bank at such time as the Bank shall
direct. The Owner and the Operator hereby agree that the Hotel
Bank Account shall be held at Dal-Ichi Kangyo Bank of
California, which account is referred to as the Operating
Account in the First Amendment.
2010n43 041492 - 7 -
PJA
Section 11. Additional Rights of Bank. The Owner and the
Operator agree that t e following shall e effective so long as
any obligation under the Credit Agreement shall remain dues
(a) Whenever the approval of the Owner or the Operator
are required under the Operating Agreement for any material
change or use in the operation or use of the Hotel or
expenditures other than in the ordinary course of business in
excess of $5,000 per occurrence or $25,000 annually, the
approval of the Bank shall also be required. The Bank shall
give written notice of approval or disapproval within a
reasonable time.
(b) Upon the request of the Bank, and at the expense of
the Owner, the Bank shall have the right to audit the records
of the Operator kept in connection with the operation and
maintenance of the Hotel. The Operator agrees to make
available such records as the Bank or its agents shall. request.
(c) Copies of all monthly, quarterly and annual reports
and financial statements required to be delivered to the Owner
by the Operator under the Operating Agreement shall be
concurrently supplied by the Operator to the Bank.
(d) Upon request by the Bank from time to time, the
Operator will deliver to the Bank copies of such other
documents and materials delivered by the Operator to the Owner
in connection with the Operating Agreement as the Bank may
reasonably request.
Section 12. Nominee. All rights and powers of the Bank
provided for herein w t respect to the transfer or ownership
of the Property, succession to the rights of the Owner,
termination of the Operating Agreement and the limitation of
liability contained in Section 6 shall be for the benefit of a
nominee of the Bank. For any such nominee, such limitation of
liability shall apply, in addition to the Owner, to the acts of
any successor to the Owner, including the Bank.
Section 13. Governing Law. This Agreement shall be
governed by and construed in accordance With the laws of the
State of California. This Agreement shall inure to the benefit
of and shall be binding upon the Bank, the Operator and the
Owner and their respective successors and assigns. This
Agreement may not be modified or amended except in writing
signed by all parties hereto and the Bank. If any one or more
of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provisions of this Agreement, but this
20102343 041492 " 8 -
x
Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
Section 14. Notices. All notices and other
communications to e g ven to any party hereunder shall be in
Writing and shall be given to such party at its address or
telecopy number set forth below or such other address or
telecopy number as such party may in the future specify for
such purpose by notice to the other parties. Each such notice
or communication shall be effective (i) if given by telecopy,
when such telecopy is received, (ii) if given by mail, 5 days
after such communication is deposited in the mail with first-
class postage prepaid, addressed as aforesaid, or (iii) if
given by any other means, when delivered at the address
specified below:
To the Owner: Waterfront Construction fl,
A California Limited Partnership
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
Attn: Stephen K. Bone
Robert L. Mayer
Telephone: (714) 759-8091
Telecopier: (714) 720-1017
To the Operator: Destination Properties, Inc.
c/o The Waterfront Hilton
21100 Pacific Coast Highway
Huntington Beach, CA 92648
Attn:
Telephone:
Telecopier:
To the Banks The Dai-Ichi Kangyo Bank, Ltd.
Los Angeles Agency
770 Wilshire Boulevard
Los Angeles, CA 90017
Attnt Business Development
Department 2
Telephone: (213) 612-6400
Telecopier: (213) 624-5258
Section 15. Operator Bound. The Operator hereby agrees
to abide by and be bound y t e provisions of Sections
4(a)(iii), 4(a)(iv) and 7 of the First Amendment.
20102343 041492 - 9 -
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
OWNER: WATERFRONT CONSTRUCTION il,
A CALIFORNIA LIMITED PARTNERSHIP
Bys THE WATERFRONT, INC.,
a California corporation
General Partner
By:
Robert L. Mayer
Chairman of the Board
and Chief Financial
Officer
OPERATOR: DESTINATION PROPERTIES, INC.,
a California corporation
Robert L. Mayer
Chairman of the Board
Michael A. Bullis
President
BANKt THE DAI-ICHI KANGYO BANK, LTD.
Los Angeles Agency
By.
Names
Title:
20102343 041492 10 -
WHEN RECORDED MAIL TO:
Pillsbury Madison & Sutro
725 South Figueroa Street. Suite 1200
Los Angeles, California 90017-2513
Attentions Eugene Y. C. Lu, Esq.
FIRST MODIFICATION OF LEASEHOLD
DEED OF TRUST AND SECURITY AGREEMENT
AND
THIS FIRST MODIFICATION OF LEASEHOLD DEED OF TRUST
AND SECURITY AGREEMENT AND FIXTURE FILING AND ASSIGNMENT OF
RENTS (CONSTRUCTION TRUST DEED), dated as of March 31, 1992
(this "Modification"), is entered into between WATERFRONT
CONSTRUCTION 41, A CALIFORNIA LIMITED PARTNERSHIP ("Trustor"),
and THE DAI-ICHI KANGYO BANK, LTD., a Japanese banking
corporation acting through its Los Angeles Agency
("Beneficiary").
RECITALS
A. Trustor executed a Leasehold Deed of Trust and
Security Agreement and Fixture Filing and Assignment of Rents
(Construction Trust Deed), dated as of March 31, 1989, in favor
of Beneficiary, which was recorded on May 18 1989 in the
Official Records of Orange County as Instrument Number 89-
229784 (the "Deed of Trust").
B. Trustor and Beneficiary wish to modify the Deed
of Trust as hereinafter set forth.
AGREEMENT
1. Section 1.01(e) of the Deed of Trust is hereby
deleted in its entirety.
2. Section 1.02(q) of the Deed of Trust is hereby
deleted in its entirety.
2010122E
3. Section 1.02 of the Deed of Trust is amended by
adding the following new subsection (q):
"(q) Cash Collateral Account. All amounts
deposite y Trustor in Account No. 681-364781
at Metrobank."
4. Section 1.05(a) of the Deed of Trust is amended
by inserting the following language after
"thereof," in line 5 thereof:
"including the First Amendment to Credit
Agreement, dated as of March 31, 1992, between
Trustor and Beneficiary,"
5. To the extent that any provision of the Deed of
Trust conflicts with any of the foregoing provisions of this
Modification, this Modification shall prevail, but in all other
aspects, the Deed of Trust shall remain in full force and
effect and is hereby ratified and confirmed.
6. On and after the date hereof, each reference in
the Deed of Trust to "this Deed of Trust," "hereunder,"
"hereof," "herein" or words of like import* and each reference
to the Deed of Trust in the other agreements and documents
delivered in connection with the transactions contemplated by
the Deed of Trust, shall mean and be a reference to the Deed of
Trust as modified hereby. The execution, delivery and effec-
tiveness of this Modification shall not, except as expressly
provided herein, operate as a waiver of any right, power or
remedy of Beneficiary under any such agreement or document or
constitute a waiver of any provision of any such agreement or
document.
7. This Modification may be executed in any number
of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken
together shall constitute one and the same instrument.
S. This Modification shall be governed by and con-
strued in accordance with the laws of the State of California.
20101228 -2 -
V/A
0
This Modification has been executed as of the date
first above Written.
20101228
WATERFRONT CONSTRUCTION #i,
A CALIFORNIA LIMITED PARTNERSHIP
By: THE WATERFRONT, INC.
General Partner
By: ?
Name:
Title: �t/� r�y/1_•�..t� O�F�c�
THE DAI-ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
By:
Name:
Titles
-3-
M10
STATE OF CALIFORNIA )
ss.
COUNTY OF )
On l S , 1992, before me, J
a Notary ublic in and for the State of California, personally
appeared a , y no
proved to me on the b sis of satisfactory evidence) to be the
person Whose name is subscribed to the within instrument, and
acknowledged to me that he or --&he executed the -within
instrument in his -or- mr authorized capacity and that, by his
ear- m-& signature on the within instrument, the person or the
entity upon behalf of which he eaG ehe acted, executed the
within instrument.
20IM229
WITNESS my hand and official, seal.
PAULA J. RENO
COMM. t9=9 U�,,
OMNGECOIJMiY it
2 + ,tCo„„,.Ea,J&-,,4.,�.. Notary Public in and for said State
-4
f-
STATE OF CALIFORNIA }
COUNTY OF )
On , 1992, before me, ,
a Notary Public in and for the State of California, personally
appeared , personally known to me (or
proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument, and
acknowledged to me that he or she executed the within
instrument in his or her authorized capacity and that, by his
or her signature on the within instrument, the person or the
entity upon behalf of which he or she acted, executed the
within instrument.
20101228
WITNESS my hand and official seal.
Votary Public in and for said State
-5-
NO
11
This Modification has been executed as of the date
first above written.
xnotna
WATERFRONT CONSTRUCTION fl,
A CALIFORNIA LIMITED PARTNERSHIP
Bys THE WATERFRONT, INC.
General Partner
By t -,✓
Namet o
Titles F,-vgi��•.t_ o�F�
3-ry �-
THE DA1 I NI �KA2 GY4 S IK, L �: ;
LOS ANGELES AGENCY
By
Names
Titlet
-3-
0
i
0. 1GINAL
This Modification his been executed as of theldate
first above written. I
. �E
WATERFRONT CONSTRUCTION 11,
A CALIFORNIA LIMITED PARTNERSHIP
Bys THE WATERFRONT, INC.
General Partner I
By: '
Names
Title;
THE DAI-ICHI itANGYO BANK,; LTD.,
LOS ANGELES AGENCY
By:
I
Name: neharu Itoh
Titles Vive President
20101228
I
I
Debtor:
Secured Party:
EXHIBIT B
to
UCC-2 Financin Statement Change ,
t
WATERFRONT CONSTRUCTION1,
A CALIFORNIA LIMITED PARTNERSHIP
Bp THE WATERFRONT, INC.'..
General Partner
Bys 1
Name: ram' t .
Titles G�/iEFi�iN a.rcoFF_
THE DAI--ICHI MNGYO BANK, : LTD. r
LOS ANGELES AGENCY
By = �.,
Name: Tsuneharu Itch
Title: vice Pres1dent Asst. General Manager
1
i
20102513 041492 � ��
PLEDGE AGREEMENT
This Pledge Agreement (this "Agreement"), dated as of
March 31, 1992, is entered into by ROBERT L. MAYER, as
Trustee of The Robert L. Mayer Trust of 1982 (the "Trust"),
dated June 22, 1982, as amended (such Trustee, solely in such
capacity, herein called the "Grantor"), PRUDENTIAL-BACHE
SECURITIES, INC. ("Broker") and THE DAI-ICHI KANGYO BANK,
LTD., a Japanese banking corporation acting through its
Los Angeles Agency (the "Bank",).
RECITALS
A. The Bank has entered into a Credit Agreement
dated as of March 31, 1989 (as from time to time amended, the
"Credit Agreement") with Waterfront Construction #1, A
California Limited Partnership (the "Obligor"), pursuant to
which the Bank has agreed to extend up to $55,000,000 in
credit to the Obligor. Capitalized terms used but not
defined herein shall have the respective meanings assigned to
them in the Credit Agreement.
B. The Obligor and the Bank are concurrently
herewith entering into a First Amendment To Credit Agreement
(the "Amendment").
C. The Grantor is concurrently herewith executing a
First Amendment to Cashflow Guaranty (the "Guaranty
Amendment"), which amends that certain Cashflow Guaranty
dated as of May 3, 1989 by Robert L. Mayer in his individual
capacity (as so amended, the "Guaranty"), by which Guaranty
Amendment Grantor shall become a joint and several guarantor
under the Guaranty of certain obligations of the Obligor
under the Credit Agreement, as more specifically set forth in
the Guaranty.
D. Robert L. Mayer, directly or indirectly,
including through the Trust, owns an interest in the Obligor
equal to 75%.
E. The Trust is the owner of that certain
Securities Account Number AGK-007648-38 (the "Account") held
by the Broker, which Account consists of cash and securities.
F. It is a condition precedent to the effectiveness
of the Amendment that the Grantor execute and deliver this
Agreement.
20101301
ar
SECTION 1. Grant of Security. In consideration for
the above, the Grantor hereby assigns and pledges to the
Bank, and hereby grants to the Bank a security interest in,
all of the Grantor's right, title and interest in and to the
following, whether now owned or hereafter acquired (the
"Collateral•):
(a) the Account, all funds held therein, all
securities held therein and all certificates and instruments,
if any, from time to time representing or evidencing the
Account or such securities and all general intangibles
relating to the Account;
(b) all notes, certificates of deposit, deposit
accounts, checks and other instruments from time to time
hereafter delivered to or otherwise possessed by the Bank for
or on behalf of the Grantor in substitution for or in
addition to any or all of the then existing Collateral;
(c) all interest, dividends, cash, instruments
and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or
all of the then existing Collateral; and
(d) all proceeds of any and all of the forego-
ing Collateral (including proceeds that constitute property
of the types described in clause (a), (b) or (c) of this
Section 1) and, to the extent not otherwise included, all
payments under insurance (whether or not the Bank is the loss
payee thereof), or under any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral.
SECTION 2. Security for Obligations. This Agreement
secures the payment of all obligatioRs of Grantor now or
hereafter existing under the Guaranty, Whether for
reimbursement, principal, interest, fees, expenses or
otherwise, and all obligations of Grantor now or hereafter
existing under this Agreement (all such obligations of the
Grantor being collectively called the "Grantor Obligations").
SECTION 3. Grantor Remains Liable. Anything herein
to the contrary notes t stan ng, (a) t e Grantor shall remain
liable under the contracts and agreements included in the
Collateral to the extent set forth therein to perform all of
its duties and obligations thereunder to the same extent as
if this Agreement had not been executed, (b) the exercise by
the Bank of any of its rights hereunder shall not release the
Grantor from any of its duties'or obligations under the
contracts and agreements included in the Collateral, and
(c) the Bank shall not have any obligation or liability under
the contracts and agreements included in the Collateral by
reason of this Agreement, and the Bank shall not be obligated
20101301 - 2 -
to perform any of the obligations or duties of the Grantor
thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
SECTION 4. Representations and Warranties. The
Grantor represents and warrants as f ollowsr
(a) The Grantor owns the Collateral free and
clear of any Lien other than the security interest created by
this Agreement and any Lien in favor of the Broker in
connection with the Margin Loan (as defined below). No
effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file
in any recording office, except such as may have been filed
in favor of the Bank relating to this Agreement.
(b) This Agreement creates a valid and per-
fected second -priority security interest in the Collateral
(subject only to the lien of the Broker), securing the
payment of the Grantor Obligations, and all filings and other
actions necessary or desirable to perfect and protect such
security interest have been duly taken.
(c) No consent of any other Person, and no
Governmental Action (except such consents as have already
been obtained and such Governmental Action as has already
been taken) is required (i) for the grant by the Grantor of
the security interest granted hereby, (ii) for the execution,
delivery or performance of this Agreement and the Guaranty
Amendment by the Grantor or (III) for the perfection of or
the exercise by the Bank of its rights and remedies
hereunder.
(d) the Account partially consists of 367,740
shares of stock of [Metrobank, National Association] (the
"Securities") and shares of stock of
(e) the certificates representing the
Securities are in the name of the Broker.
(f) the Securities are publicly traded, have
been registered in accordance with applicable Governmental
Rules, are not restricted and are freely marketable.
SECTION 5. Further Assurances.
(a) The Grantor agrees that from time to time,
at the expense of the Grantor, the Grantor will promptly
execute and deliver all further Instruments 'and documents,
and take all further action, that may reasonably be necessary
or desirable, or that the Bank may reasonably request, in
order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Bank to
exercise and enforce its rights and remedies hereunder with
20101301 - 3 -
respect to any Collateral. without limiting the generality
of the foregoing, the Grantor will, at the request of the
Bank, (i) mark conspicuously each -of its records pertaining
to its Collateral with a legend, in form and substance
satisfactory to the Bank, indicating that such Collateral is
subject to the security interest granted hereby; and
(ii) execute and file such financing and continuation
statements, and amendments thereto, and such other
instruments or notices,'as may be necessary or desirable, or
as the Bank may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby.
(b) The Grantor hereby authorizes the Bank to
file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the
Collateral without the signature of the Grantor where
permitted by law. A carbon, photographic or other
reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(c) The Grantor will furnish to the Bank from
time to time statements and schedules further identifying and
describing the Collateral and such other reports in
connection with the Collateral as the Bank may reasonably
request, all in reasonable detail.
SECTION b. As to Account.
(a) The Grantor shall maintain the Account with
the Broker.
(b) It shall be a term and condition of the
Account, notwithstanding any term or condition to the
contrary in any other agreement relating to the Account and
except as otherwise provided herein, that no amount (except
any amount Which is in excess of the sum of (1) $1,500,000
(which represents the Margin Loan plus a variable cushion)
and (ii) twice the amount of Grantor's obligations under the
Guaranty remaining from time to time) and no securities or
certificates or other instruments representing the same,
shall be paid or released to or for the account of, or
withdrawn by or for the account of, the Grantor or any other
Person (other than the Bank and other than as specifically
permitted hereunder) from the Account during the
effectiveness of this Agreement.
(c) All certificates or instruments, if any,
representing or evidencing the Collateral and held by the
Broker shall be held by the Broker as agent'for and on behalf
of the Bank. The Broker hereby agrees to hold such
certificates or instruments as agent for the Bank.
20101301 — 4
M,
(d) So long as no Event of Default has occurred
and is continuing and except as specifically provided in the
Guaranty and in this Agreement, the Grantor shall control the
ordinary activities in the Account, including trading in
securities; provided, that such activities are not intended
to deplete t e va ue of the Account.
(e) The Broker hereby agrees to deliver to the
Bank a copy of each monthly statement sent to the Grantor
with respect to the Account at the same time such statement
is sent to the Grantor, and the Grantor hereby consents to
such agreement by the Broker.
(f) So long as no Event of Default has occurred
and is continuing, the Broker may pay, and the Grantor may
receive: dividends payable with respect to securities in the
Account.
SECTION 7. Transfers and Other Liens. The Grantor
shall nots
(a) sell, assign (by operation of law or other-
wise) or otherwise dispose of, or grant any option with
respect to, the Grantor's ownership interest in any of the
Collateral (other than as permitted under Section 6(d)
above); or
(b) create or suffer to exist any Lien upon or
with respect to any of the Collateral to secure the debt of
any Person, except for the security interest created by this
Agreement and except as specifically permitted hereunder.
SECTION B. A reement Regarding Interest in and
Disp2sition of Collateral. The Grantor, the Bank an the
Broker hereby agree an acknowledge as follows:
(a) the Broker has committed to make a margin
loan to the Grantor up to but not exceeding the lesser of (i)
$1,100,000 and (11) 30% of the total value of the Account
(the "Margin Loan"), which Margin Loan is secured by a first -
priority lien in the Account;
(b) the Broker retains the first right to
liquidate securities in the Account in the event of a margin
call and to debit the Account for margin interest and
commissions; and
(c) if at any time the value of the Securities
In the Account decreases so that the Margin Loan is no longer
less than or equal to 30% of the total value of the Account,
then either (I) the Grantor shall pay to the Broker such
amount as is necessary to reduce the Margin Loan to a level
where it is less than or equal to 30% of the total value of
the Account or (ii) the Broker shall sell such portion of the
20IM3M
- 5 -
securities in the Account to achieve the same result as (i)
above.
SECTION 9. Bank Appointed Attorney -in -Fact. The
Grantor hereby Irrevocabiy appoints, effective rom and
after, and during the continuance of, an Event of Default,
the Bank the Grantor's attorney -in -fact, with full authority
in the place and stead of the Grantor and in the name of the
Grantor or otherwise, from time to time in the Bank's
discretion, to take any action and to execute any instrument
that the Bank may deem necessary or advisable to accomplish
the purposes of this Agreement, including the following:
(a) to ask for, demand, collect, sue for,
recover, compromise, receive and give acquittance and
receipts for moneys due and to become due under or in respect
of any Collateral;
(b) to receive, endorse and collect any drafts
or other instruments, documents or chattel paper in
connection with clause (a) above; and
(c) to file any claims, take any action or
institute any proceedings that the Bank may deem necessary or
desirable for the collection of any of the Collateral or
otherwise to enforce the rights of the Bank with respect to
any of the Collateral.
SECTION 10. Bank -HaX Perform. If the Grantor fails
to perform any agreement contained herein, the Bank may, upon
written notice to the Grantor, itself perform, or cause
performance of, such agreement, and the reasonable expenses
of the Bank incurred in connection therewith shall be payable
by the Grantor under Section 13(b).
SECTION 11. Bank's Duties. The powers conferred on
the Bank hereunder are so e y to protect its interest in the
Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Bank shall have no
duty as to the Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or
any other rights pertaining to the Collateral. The Bank
shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession
if such Collateral is accorded treatment substantially equal
to that that the Bank accords its own property.
SECTION 12. Remedies. If the Obligor fails to pay
any of the Obligations (as defined in the Guaranty) at any
time and subject to Section 19 of the Guaranty:
201013M
- 6 -
(a) Subject to Section 8(b), on and after
January 1, 2993, the Bank may, upon notice to the Broker,
without notice to the Grantor except as required by law and
at any time or from time to time, charge, set off, liquidate
the securities in, withdraw from and otherwise apply all or
any part of the Collateral, without limitation, against the
Grantor Obligations or any part thereof; provided, that the
Bank agrees to sell no more than 12,500 s arh---es-of the
Securities every 30 days (other than shares of Securities
sold pursuant to Section 8(c)(ii) hereof), provided, further,
that the Bank agrees not to sell any other securities `in the
Account until after all the Securities have been sold. Upon
written notice to the Broker, with a copy to the Grantor, the
Grantor shall have no further control over the Account and
activities in the Account or with respect to the Collateral,
including trading in the Securities, and such control shall
be exercised by the Bank in its sole discretion. The Broker
hereby agrees to abide by any written notice received
pursuant to this Section 12(a), and to, forthwith upon
receipt of such notice, promptly sell, at the then current
market price
, such number of the Securities as is necessary to satisfy
the Grantor's payment obligation set forth in such notice
and, upon such sale, to promptly forward to the Bank the
proceeds of such sale.
(b) The Bank may exercise in respect of the
Collateral, in addition to other rights and remedies provided
for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform
Commercial Code (the "Code") (whether or not the Code applies
to the affected Collatez-aI). The Grantor agrees that, to the
extent notice of sale shall be required by law, at least
10 days' notice to the Grantor of the time and place of any
public sale or the time after which any private sale is to be
made, such public or private sale conducted by the Broker as
provided in (a) above, shall constitute reasonable
notification. The Bank shall not be obligated to make any
sale of the Collateral regardless of notice of sale having
been given. The Bank may adjourn any public or private sale
from time to time by announcement at the time and place fixed
-----therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned.
(c) Any cash held by the Bank as Collateral and
all cash proceeds received by the Bank in respect of any sale
of, collection from or other realization upon all or any part
of the Collateral may, in the discretion of the Bank, be held
by the Bank as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to
the Bank pursuant to Section 13) in whole or in part by the
Bank against, all or any part of the Obligations in such
order as the Bank may elect. Any surplus of such cash or
cash proceeds held by the Bank and remaining after payment in
201013M
- 7 -
or?
full of the Grantor obligations shall be paid over to the
Grantor or other Person lawfully entitled to receive such
surplus.
SECTION 13. 'Indemnity and Ex enses.
(a) The Grantor agrees to indemnify the Bank
from and against any and all claims, losses and liabilities
growing out of or resulting from this Agreement (including
enforcement of this Agreement), except claims, losses or lia-
bilities resulting from the Bank's gross negligence or
willful misconduct.
(b) The Grantor will upon demand pay to the
Bank the amount of any and all reasonable expenses, including
the reasonable fees and disbursements of its counsel and of
any experts and agents, that the Bank may incur in connection
with (i) the administration of this Agreement, (ii) the
custody, preservation, use, operation of, sale of, collection
from or other realization upon any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the
Bank hereunder or (iv) the failure by the Grantor to perform
or observe any of the provisions hereof. The Grantor hereby
agrees that any and all of the expenses set forth above are
payable from the proceeds of the Account, and hereby directs
the Broker to pay all such expenses from the Account upon
demand by the Bank. The Broker hereby agrees to abide by the
foregoing sentence.
SECTION 14. Amendments Etc. No amendment or waiver
of any provision of thTs Agreement or consent to any
departure by the Grantor here from shall in any event be
effective unless the same shall be in writing and signed by
the Bank, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose
for which given.
SECTION 15. Addresses for Notices. All notices and
other communications proviaed for hereunaer shall be in
writing (including communication by telecopier) and shall be
mailed, telecopied or delivered to the parties hereto, at the
addresses or telecopier numbers therefor set forth below, or
at such other address or telecopier number as shall be
designated by such party in a written notice to the other
parties complying as to delivery with the terms of this
Section 15. All such notices and other communications shall,
when mailed or telecopied, be effective 72 hours after being
deposited in the mails or when received, respectively,
addressed as aforesaid.
201013M - 8 -
9P
f Grantors c/o Waterfront Construction #1,
A California Limited Partnership
660 Newport Center Drive
Suite 1050
Newport Beach, California 92660
Attn: Mr. Robert L. Mayer
Telecopier: (714) 720-1017
Bank: 770 Wilshire Boulevard
Los Angeles, California 90017
Attn: Mr. Dan Dawes,
Business Development
Department 2
Telecopier: (213) 612-5258
Brokers 72-027 Highway Ill
Rancho Mirage, California 92270
Attn: Mr. Ronald G. See
Telecopier: (619) 341-9346
SECTION 16. Continuing Security Interest. This
Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in effect until payment in
full of the Grantor Obligations whereupon it shall terminte,
(ii) be binding upon the Grantor and its successors and
assigns and (iii) inure, together with the rights and
remedies of the Bank hereunder, to the benefit of the Bank
and its successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), the
Bank may assign or otherwise transfer any of its rights and
obligations under the Guaranty and the other Operative
Agreements to any other Person, and such other Person shall
thereupon become vested with all of the benefits in respect
thereof granted to the Bank herein or otherwise.
SECTION 17. Broker Bound. The Broker hereby
acknowledges the secur ty interest granted in this Agreement
and agrees to abide by and be bound by the provision of this
Agreement. The Broker represents that, to its knowledge,
there have been no previous security interests granted in,
assignments of or claims made against the Collateral.
SECTION 18. Governing Law• Terms. This Agreement
shall be governed by and construed in accordance with the
laws of the State of California. Unless otherwise defined
herein or in the Credit Agreement, terms used in Article 9 of
the California Commercial Code are used herein as therein
defined.
SECTION 19. Broker Held Harmless. The Broker and
its officers, directors an em-p ogees s all not be liable,
and the Grantor and the Bank hold the Broker harmless, for
any action or inaction of the Broker when acting or not
acting pursuant to instructions from the Grantor or the Bank
20101301 i 9
05-19=92 02:13PM FROM PII,I.SBURY, MADISON
TO 17143741590
P003/006
i» cc mp iance with this. Agreemen t e exbopt: .for -the B.r_oke.r: ' s
grass n(pgligence• or willful misooriduct.
SECTION 20 ; G:ruftl.o:r. lociraGi . {1'1i Csr��:fl!:Car 'hereby
agrees to abide by a-n L b6i.ind 13Y th.-a Provisions r.)'y
Section - 4 (a )(i) of the A.inandment.. .
Grantor i
Broker
Banks
fW% :L3 P L . M:AYER. ,
as Truisteo or -The
Robe. t Z�: l4aylex Tr us.c of 1982,
dated. June. 22, 1982, as amended
PRUL"?ENTIA L-f37',CIIAE SEC;1JI2.:C':'i IE:;; , INC,
Name
THE DAI--ICHI XANGYO. 8AN.K, LTD*,
LOS ANGLES AGENCY
Name; Ts"
ine s.ix ; • i col,
'1'i.'t i:e. Vi.cc ''t :• i rl��t�C h Asec. Gane'r al. Manager
. 1 .
Ackttcaw edgac3 a racl C041S;0—n. Ka .to by:
MAY•ER,
as Trustor and befteficiary'
of The Robert L . MaYO
Trust oi. 1982, dated +:7'UAS 22., 1982.,
ag ainenciod •
j
Oi¢�3A1 _ ].Q
�1
in compliance with this Agreement, except for the Broker's
gross negligence or willful misconduct.
SECTION 20. Grantor Bound. The Grantor hereby
agrees to abide by an a oun y the provisions of
Section 4(a)(i) of the Amendment.
Grantors z 0= ,_ --' t"�1t�f��.r%
ROBERT L. MAYER,
as Trustee of The
Robert L. Mayer Trust of 1982,
dated June 22, 1982, as amended
Broker: PRUDENTIAL-BACHE SECURITIES, INC.
By:
Names
Titles
Banks THE DAI-ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
By:
Name
Title:
Acknowledged and Consented to by:
ROBERT L. l4AYER; f
as Trustor and Beneficiary
of The Robert L. Mayer
Trust of 1982, dated June 22, 1982,
as amended
zo�oi3o� - 10 -
in compliance with this•Agreement, except for the Broker's
gross negligence or willful misconduct.
SECTION
agrees to abide
Section 4(a)(i)
20, Grantor Bound. The Grantor hereby
by and be bound by the provisions of
of the Amendment.
Grantors ,o�•�`�.� .. _
ROBERT L. MAYER,
as Trustee of The
Robert L. Mayer Trust of 1982,
datedJune22, 1982; as amended
Robert L. nay Trustee Date S-
Brokers PRUDENTIAL-BACHE SECURITIES, INC.
Sys
Names
Titles
Banks THE DAY--ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
Bye
Names
Titles
Acknowledged and Consented to byt
ROBERT L. FAYER,
as Trustor and Benef 4iary
Of The Robert L. !Sayer
Trust of 1982, dated June 22, 1982,
as amended
r
S y
'Robert L. Maye pate
20101301
- 10 -
r
05-19-92 02:13PM
w
FROM PILLSBURY,MADiSON
i
TO 17143741590 P006/006
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
OWNER: WATERPROitia' L:UNSTRUCT!ON #1 ,
A CALTFOP H I A LIMITED PARTNER.S.ki f'p
Syr: THE wA'I'f:Rk"RON11', 'INC ,
a L.•t 1 i torr+ rt
Gvn(a r'? 1 lla -t.ne t
r
arid h [-r. r 1'lY1ar1i: i a
��i f 1.CEt
OPERATOR.,
d Cal l ttJt [:i'.i Ipt.ir,iLi �n
Robert L. Mayer,
Chairman of the Board
MiChae:L
President
BANK: 'I'11I'. D.R.1 "I1L 1 T%.V;Y:'?
L.-Is 1 ,... Aq-!111' Y
By
Name:'1'st;.t.
Title:X'1i'�' PrtL-l.tJv!-t 1. A4:.t, GewLer91 4anager
20102343 U 1492 - 10 -
r1o.
.9-92-0-2:1 3-PM"
OM P I LL SBURY, MAD I SON TO' 1T1 4 3..7 4 15 9,0
SECTION 1. overnino Law. TVA Armend.ment shall be
g6varnea by, anti corer tn'.1-fi"d in acto.cdaiulle wi.th, the Laws of
the Staite of California.
SUCTION 8 So -Soo rllact.-riC bfld C li a r a V, t. RE hGx-ohy
aqrees that any amount„ to sett.1 e the claims of
Sasco Electr- ic - shall not reduce, and are i n a d d i ti n n t. o ,
RM's on'ligat.ions und-ex the Goax-IlUaty, as amendled he�reby,
f. bl-A-YEP
ROBERT llo I'ViLYHRI
r r- ayer
,v---ustee of tho Robe: t L. m
g.'rust of 19Kli dated June 22,
1982, aa amended
-0 SANX, LTD.
THE DAI'-TCFII KAI%I�CY
A.tes Agency
-LOS Ang'C
Nami.�'
Titic-'-a- VICU Pre-sidetit 6 Asst. Gemilral Manager
6
f
FIRST AMENDMENT TO CASHFLOW GUARANTY
This First Amendment to Cashflow Guaranty (the
"Amendment"), dated as of March 31, 1992, is entered into
among Robert L. Mayer, an individual ("RM"), Robert L. Mayer
as Trustee of the Robert L. Mayer Trust of 19B2, dated
June 22, 1982 (the "Trust"), as amended (in such capacity,
the "Trustee" and together with RM, the "Guarantor") and The
Dai-Ichi Rangyo Bank, Ltd., Los Angeles Agency (the "Bank").
Recital
A. RM has executed a Cashflow Guaranty dated May 3,
1989 (the "Guaranty") in favor of the Bank, guaranteeing
certain obligations of Waterfront Construction #1, A
California Limited Partnership (the "Obligor") under that
certain Credit Agreement dated as of March 31, 1989 between
the Obligor and the Bank (the "Credit Agreement").
B. The Obligor
a First Amendment to
"First Amendment").
is concurrently herewith entering into
Credit Agreement With the Bank (the
C. The parties hereto wish to add the Trustee to the
Guaranty as a joint and several "Guarantor."
D. The Trustee is concurrently herewith entering into
a pledge agreement (the "Pledge Agreement") with the Bank and
Prudential-Bache Securities, Inc. in order to secure its
obligations under the Guaranty, as amended hereby.
E. The Bank has agreed that the Guaranty shall be non -
recourse with respect to the Trustee or the Trust or their
assets, except such assets of the Trustee or the Trust as are
encumbered by the Pledge Agreement.
F. The Bank has also agreed, as more accurately set
forth below and subject to the conditions set forth below, to
pursue its remedies under the Guaranty and the Pledge
Agreement in a certain order, provided that the Guaranty
shall continue to be full recourse (subject to.the limitation
set forth in the Guaranty) with respect to RM.
NOW, THEREFORE, in consideration for the above and as a
condition precedent to the effectiveness of the First
20101491
din
Amendment, the parties hereto wish to amend the Guaranty as
set forth below.
SECTION 1. Amendments to GuarantX The Guaranty
is, effective as of the ate hereoff hereby amended as
followss
(a) The words "Dated as of March 31, 1989"
are hereby deleted from the top of the first page of the
Guaranty.
(b) The first paragraph of the Guaranty is
hereby amended in its entirety to read as follows:
"ROBERT L. MAYER for himself in his individual
capacity ('RM') and ROBERT L. MAYER AS TRUSTEE
OF THE ROBERT L. MAYER TRUST OF 1982 (the
'Trust'), dated June 22, 1982, as amended (in
such capacity, the 'Trustee' and together with
RM, the 'Guarantor'), in order to induce THE
DAI-ICHI KANGYO BANK, LTD., LOS ANGELES AGENCY
(the 'Bank') to issue letters of credit for
the account of, and to extend loans to,
WATERFRONT CONSTRUCTION #l, A CALIFORNIA
LIMITED PARTNERSHIP (the 'Obligor`) pursuant
to the Credit Agreement dated as of March 31,
1989 between the Obligor and the Bank, as
amended by the First Amendment to Credit
Agreement dated as of March 31, 1992 (as so
amended, the 'Credit Agreement'), hereby,
jointly and severally, unconditionally and
irrevocably guarantees, as a continuing
obligation, to the Bank that with effect from
Completion of Construction of, and the
issuance of the certificate of occupancy for,
the Project (the 'Effective Date') the Obligor
will pay when due all Obligations (as
hereafter defined) to the Bank at 770 Wilshire
Boulevard, Los Angeles, California 90017, or
at any other place designated by the Bank to
the Obligor in writing, and that, if for any
reason the Obligor does not make such payment
on or after the Effective Date, the Guarantor
shall, jointly or severally, pay the
Obligations upon first demand by the Bank in
accordance with the following terms:`
(c) The following new Sections 15, 17, 18 and
19 are hereby added to the Guarantys
20101491
I'IM
gP
016. Joint and Several Liabilit . The
liability oZ RM and the Trustee hereunder shall be
joint and several."
017. Se�curiit . The joint and several
obligations of —the Trustee under this Guaranty are
secured by that certain Pledge Agreement dated as
of March 31, 1992 (the 'Pledge Agreement') among
the Trustee, the Bank and Prudential-Bache
Securities, Inc. (the 'Broker')."
018. Non -Recourse Against Trustee
and Trust. T s Guaranty shall a non -
recourse with respect to the Trustee, the
Trust and their assets, except such
assets of the Trustee and the Trust as
are encumbered by the Pledge Agreement.
This Guaranty, subject to Section 19
below, shall continue to be full -recourse
(subject to the limitation set forth in
this Guaranty) with respect to RM and his
assets."
019. Bank's Agreements. The Bank hereby
agrees that so ong as no Event of Default (as
defined in the Credit Agreement) has occurred
and is continuing, the Bank shall (i) not
demand payment from the Guarantor hereunder
prior to January 1, 1993 and (ii) on and after
January 1, 1993, first pursue its remedies
under the Pledge Agreement to satisfy any
payment obligations of the Guarantor hereunder
and not pursue RM under this Guaranty until
such time as the Bank has exhausted its
remedies under, and as provided in, the Pledge
Agreement; 2rovided, that if either of the
following can tons exist, then the Bank
shall not be bound by this Section 19:
(a) after giving written notice to the Broker
and the Trustee pursuant to Section 12(a) of
the Pledge Agreement, the Bank is for any
reason, other than due to its own
unwillingness or gross negligence, unable to
liquidate the Securities (as defined in the
Pledge Agreement) and such inability
continues for a period of five (5) business
days after such written notice is given, or
(b) the fair market value of the Securities
and other property in the Account (as defined
in the Pledge Agreement) is less than the sum
of (1) $500,000 and (ii) such value as is
necessary to avoid a margin call by the
20101491
- 3 -
Broker, or (c) the difference between (i) the
fair market value of the Securities and other
property in the Account and (ii) the Broker's
Margin Loan (as defined in the Pledge
Agreement) is less than the greater of (A)
$500,000 and (B) the amount of the then
remaining Obligations under the Guaranty."
SECTION 2. Reference to Guarantor. From and after
the effectiveness of this Amendment, a re erences in the
Guaranty to Guarantor shall collectively mean RM and the'
Trustee, as jointly and severally liable.
SECTION 3. Conditions of Effectiveness. This
Amendment shall become effective when and if the First
Amendment becomes effective.
SECTION 4. Representations and warranties.
(a) Due Ca acit The execution, delivery
and performance of this Amen ent are within the Guarantor's
legal capacity, except as disclosed in Writing to the Bank,
do not contravene any law or contractual restriction binding
on or affecting the Guarantor, and do not result in or
require the creation of any lien upon or with respect to the'
Guarantor's properties other than as created herein.
r'
(b) Governmental A2provals. No
authorization, approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance
by the Guarantor of this Amendment, except such action as has
already been obtained.
(c) Binding Effect. This Amendment is the
legal, valid and binding obligation of the Guarantor
enforceable against the Guarantor in accordance with the
terms hereof, subject to the effect of bankruptcy,
insolvency, reorganization, fraudulent conveyance,
preferential transfer, moratorium and other similar laws
limiting the enforceability of creditors' rights generally
and subject to limitations imposed by equitable principles
upon the availability of the remedy of specific performance,
injunctive relief or other equitable remedies.
(d) Litigation. Except for actions or
proceedings institute y J.A. Jones Construction Company,
there is no pending or threatened actionjor proceeding
affecting the Guarantor before any court, governmental agency
or arbitrator that may materially adversely affect the
financial condition of the Guarantor or the ability of the
20101491
4
Guarantor to perform his obligations under the Guaranty as
amended by this Amendment.
(e) Financial Statements. RM's most recent
unaudited annual financial statements and statement of assets
and liabilities, and income tax returns, copies of which have
been furnished to the Bank, fairly present the financial
condition of RM at such dates and the results of his
operations for the periods ended on'such dates.
SECTION 5. Reference to and Effect on the
Guam.
(a) Upon the effectiveness of Sections 1, on
and after the date hereof each reference in the Guaranty to
"this Guaranty," "hereunder," •hereof," "herein" or words of
like import, and each reference in any other written
agreement to the Credit Guaranty, shall mean and be a refer-
ence to the Guaranty as amended hereby.
(b) Except as specifically amended above, the
Guaranty shall remain in full force and effect and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness
of this Amendment shall not, except as expressly provided
herein, operate as a waiver of any right, power or remedy of
any Bank under the Guaranty or constitute a waiver of any
provision of the Guaranty.
SECTION 6. Execution in Counterparts. This Amend-
ment may be executed in any number ot counterparts and by
different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an
original and all of which taken together shall constitute one
and the same instrument.
20101491
-5-
�SECTION 7. Governing Law. This Amendment shall be
governed by, and construed in accordance with, the laws of
the State of California.
SECTION 8. Sasco Electric and Guaranty. RM hereby
agrees that any amounts paid by RM to settle the claims of
Sasco Electric shall not reduce, and are in addition to,
RM's obligations under the Guaranty, as amended hereby.
Guarantors
RO ERT L. MAYER ty
Guarantors
ROBERT L. MAYER,
Trustee of the Robert L. Mayer
Trust of 1982, dated June 22,
1982, as amended
Bank: THE DAI-ICHI KANGYO BANK, LTD.
Los Angeles Agency
2DID1491
Bys
Name:
Titles
6 -
k0l
--- SECTION 7. Governin2 Law. This amendment shall be
governed by, and construed in accordance with, the lams of
the State of California.
SECTION S. Sasco Electric and Guaranty. RM hereby
agrees that any amounts paid by RM to settle t e claims of
Sasco Electric shall not reduce, and are in addition to,
RM's obligations under the Guaranty, as amended hereby.
Guarantors L�—
RO ERT MAYER el
Robert L. Mayer Date
Guarantors f1
ROBERT L. MAYER,
Trustee of the Robert L. Mayer
Trust of 1982, dated June 22,
2982, as amended
Robert L. Mayer, ustee Date
Banks THE DAI—ICHI KANGYO BANK, LTD.
Los Angeles Agency
mto14ss
Bys
Names
Titles
-6-
ASSIGNMENT OF OPERATING AGREEMENT
AND SUBORDINATION AGREEMENT AND AMENDMENT
THIS ASSIGNMENT OF OPERATING AGREEMENT AND SUBORDINATION
AGREEMENT AND AMENDMENT (this "Agreement") dated as of
March 31, 19928 is made by WATERFRONT CONSTRUCTION #1, A
California Limited Partnership (the "Owner"), DESTINATION
PROPERTIES, INC., a California corporation (the "Operator"),
and THE DAI-ICHI RANGYO BANK, LTD., Los Angeles Agency (the
"Bank"). All definitional terms used without definition herein
have the same meanings assigned to them in the Credit Agreement
described below.
RECITALS
A. The Owner and the Bank have entered into a Credit
Agreement dated as of March 31, 1989, as amended by the First
Amendment to Credit Agreement (the "First Amendment") dated as
of March 31, 1992 (as so amended, the "Credit Agreement"),
pursuant to which the Bank provided a loan and letter of credit
facility up to the maximum aggregate principal amount of
$55,000,000 to finance the construction costs of the Project.
The Owner has executed a Leasehold Deed of Trust and Security
Agreement and Fixture Filing and Assignment of Rents
(Construction Trust Deed) dated as of March 31, 1989 and
recorded on May 1, 1989 in the Official Records of Orange
County as Instrument No. 89-229784, as modified by the First
Modification to Leasehold Deed of Trust and Security Agreement
and Fixture Filing and Assignment of Rents (Construction Trust
Deed) dated as of March 31, 1992 (as so modified, the "Deed of
Trust"), encumbering certain real property in Huntington Beach,
California more -particularly described in Exhibit "A" to the
Deed of Trust (the "Land") and certain personal property
related thereto.
B. The Owner and the Operator have entered into a Hotel
Management and Operating Agreement dated as of January 2, 1991,
as amended hereby (the "0perating Agreement"), pursuant to
which the Operator has been engaged to manage and operate the
hotel complex commonly known as "The Waterfront Hilton" and
located on the Land (the "Hotel" and together with the Land,
the "Property").
C. This Agreement is being entered into as a condition
precedent to the effectiveness of the First Amendment.
20102343 041492
Pr
NOW THEREFORE, in consideration of the foregoing facts and
mutual covenants contained herein, the parties hereto agree as
follows:
Section 1. Assignment. The Owner hereby assigns and
transfers to the Banc, Its successors and assigns, for security
purposes only, all of the Owner's right, title and interest in
the Operating Agreement. Subject to the terms and provisions
set forth herein, the Operator hereby consents to such
assignment and to such action as may be taken by the Bank
hereunder. Neither this assignment nor any action or actions
on the part of the Bank shall constitute an assumption by the
Bank of any of the Owner's obligations under the Operating
Agreement unless the Bank shall have given written notice to
the Operator of its election, subject to the provisions of
Section 6 hereof, to commence operation of the Property
following an uncured Event of Default by the Owner under the
Credit Agreement. The Owner shall continue to be liable for
all obligations under the Operating Agreement and the Owner
hereby agrees to perform all of such obligations until the Bank
or a third party purchaser has obtained title to the Property
either through foreclosure or otherwise. Subject to the
provisions of Section 6 hereof, upon the occurrence of an Event
of Default under the Credit Agreement, the Bank may elect to
reassign its rights under the Operating Agreement to any person
or entity selected by the Bank. The Bank shall have no right
to enforce the provisions of the Operating Agreement until
there shall exist an Event of Default under the Credit
Agreement. Upon the occurrence of an Event of Default by the
Owner under the Credit Agreement, the Bank may, without
affecting any of its rights or remedies against the Owner under
any other instrument, document or agreement, exercise its
rights under this Agreement as the Owner's attorney in fact
(which appointment is coupled with an interest and is
irrevocable) or in any other manner permitted by law, and in
addition the Bank shall have and possess, Without limitation,
any and all rights and remedies of a secured party provided at
law or at equity.
Section 2. Subordination. During the term of the Credit
Agreement and subject to t e provisions of this Section and
Section 6 below, the right of the Bank to complete repayment of
(i) all Loans and LOC Disbursements, (ii) any credit extended
pursuant to the Credit Agreement, and (iii) any renewals and
extensions thereof, shall unconditionally be and remain at all
times prior and superior to the interests of the Operator under
the Operating Agreement to the extent that the "Incentive
Management Fee" and any portion of the "Base Management Fee"
(as such terms are defined in the Operating Agreement) have not
been or shall not be paid by the Owner to the Operator, during
both the 1991 and 1992 calendar years. Notwithstanding
20102343 041492 " 2
Pil
anything set forth herein to the contrary, during the term of
the Credit Agreement, the Base Management Fee (as reduced
pursuant to Section 3 below), shall be paid currently to the
Operator so long as the Operating Agreement remains in full
force and effect.
Section 3. Amendment.
(a) The Owner and the Operator hereby amend
Section 8.1.1 of the Operating Agreement in its entirety to
read as follows:
08.1.1 For each month during the Operating Term (and
proportionately for any fraction of a month), Owner
shall pay to Operator for services rendered under
this Agreement, a Base Management Fee equal to three
percent (3%) of Gross Revenue during the 1992
calendar year and equal to four percent (48) of Gross
Revenue thereafter, payable monthly. The Base
Management Fee shall be a deduction."
(b) Except as amended hereby, the Operating Agreement
shall remain in full force and effect and is hereby ratified.
(c) On and after the date hereof, any reference in the
Operating Agreement or any other agreement to "Agreement,`
"hereunder," 'herein," "hereof," or words of the like import
referring to the Operating Agreement shall mean and be a
reference to the Operating Agreement as amended hereby.
Section 4. Representations and Warranties of the Owner
and the Operator.
(a) The Operator represents and Warrants to the Bank
that: (i) the Operator has all requisite power and authority
to execute and deliver, and to perform all of its obligations
under, the Operating Agreement and this Agreement; (ii) the
execution and delivery by the Operator of, and the performance
by the Operator of each of its obligations under, the Operating
Agreement and this Agreement have been duly authorized by all
necessary action and do not and will not require any
authorization, consent, approval, order, license, permit or
exemption from, or filing, registration or qualification with,
any governmental agency or other person or entity that has not
already been obtained; and (iii) the rights and interests of
the Operator arising under the Operating Agreement do not give
rise to a Lien or other similar interest in favor of Operator
against the Property.
(b) The Operator and the Owner represent and warrant to
the Bank that: (i) true and complete copies of the Operating
Agreement have been delivered to the Bank; (ii) the Operating
l^ ,
20102343 441492 - 3
Agreement constitutes the entire agreement between the Owner
and the Operator relating to the management and operation of
the Property; (iii) the Operating Agreement is genuine, valid
and enforceable in accordance with its terms, is in full force
and effect with no defaults thereunder and has not been
supplemented, modified or amended in any respect; (iv) no event
has occurred that would constitute a default under the
Operating Agreement upon the giving of notice or a lapse of
time or both, and neither the Operator nor the Owner has any
defenses, offsets or counterclaims to the enforcement of the
Operating Agreement or any interest thereon.
Section 5. Covenants of the Owner and the Operator.
(a) The Owner and the Operator agree that (i) no
Incentive Management Fee shall be paid during the 1992 calendar
year, (ii) the Base Management Fee payable during the 1992
calendar year shall only be paid at the reduced rate set forth
in Section 3, (iii) such Incentive Management Fee and such
unpaid portion of the Base Management Fee, together with any
accrued and unpaid Incentive Management Fee and Base Management
Fee for the 1991 calendar year, shall remain unpaid and
subordinated pursuant to Section 2 and (iv) the Bank shall have
no obligation to pay any accrued and unpaid Incentive
Management Fee or Base Management Fee.
(b) The Owner agrees that, unless the Bank otherwise
consents in writing: (i) the Owner will perform all
obligations on its part to be performed under the Operating
Agreement, and will take all action reasonably necessary to
maintain the Operating Agreement in full force and effect;
(ii) the Owner will, at its sole cost and expense, enforce the
Operating Agreement in accordance with the terms thereof and,
upon an uncured event of default under the Operating Agreement,
or upon an event which, with notice or the passage of time or
both, would constitute an event of default under the Operating
Agreement, the owner will, at its sole cost and expense,
enforce the Operating Agreement as the Bank may require, and
take or refrain from taking such action in connection therewith
as the Bank may require; and (iii) the Owner will, at its sole
cost and expense, defend any action in any manner connected
with the Operating Agreement or any obligations thereunder.
(c) The Operator agree's that, unless the Bank otherwise
consents in writing, the Operator will perform all obligations
on its part to be performed under the Operating Agreement.
(d) The Owner and the Operator agree that, unless the
Bank otherwise consents in writing and except as otherwise
provided in this Agreement: (i) no material alteration,
supplement, extension, renewal, release, termination, or waiver
shall be made or shall be effective, nor shall any material
f ;
20102343 041492 - 4 - �pq
agreement or consent be entered into or given with respect to
the Operating Agreement or any material condition, covenant,
default, remedy, right, representation or term thereof or
thereunder or any person obligated thereon (provided, however,
copies of all modifications to the Operating Agreement, whether
material or otherwise, shall be forwarded to the Bank); (ii) no
prepayment of any amount due to the Owner or the Operator under
the Operating Agreement shall be made or accepted;
(iii) neither the Owner nor the Operator shall further assign,
encumber or otherwise transfer the Operating Agreement or any
interest therein; and (iv) the Owner and the Operator will each
promptly deliver to the Bank copies of any notices of default
sent or received by the Owner or the Operator under the
Operating Agreement and in any event will give the Bank prompt
written notice of any default or alleged default thereunder.
(e) Notwithstanding any provisions in the Operating
Agreement to the contrary, Operator shall submit the proposed
draft Annual Plan (as defined in the Operating Agreement) and
any subsequent revisions to the Bank concurrently with its
submission to the Owner, for the Bank's prior written approval.
The Bank shall approve or disapprove of the Annual Plan within
the same time given to the Owner for response pursuant to
Section 4.1.2 of the Operating Agreement. If the Bank fails to
respond within such period, the Annual Plan shall be deemed
approved. If the parties shall fail to approve an Annual Plan
for any fiscal year, pending resolution of any dispute in
connection with the Annual Plan between the Owner, the Bank and
the Operator (which all parties shall conduct in good faith),
the Operator shall operate the Property during such succeeding
fiscal year with the same level of service (including
expenditure for furniture, fixtures and equipment) as it had
operated the Property during the previous fiscal year with such
reasonable modifications and changes as required by the then
existing economic and market conditions. Notwithstanding any
provisions in the Operating Agreement to the contrary, the
Operator and the Owner shall not cause or permit any
expenditure in excess of the amount set forth in any approved
Annual Plan except in the case of an emergency. (If an
expenditure occurs during an emergency, the Operator or the
Owner shall provide to the Bank within two days after the date
of such expenditure written notice of the expenditure and a
reasonably detailed description of the nature of the
emergency).
(f) The Operator agrees that upon the Bank's acquiring
title to the Property or upon the appointment of a receiver
pursuant to the terms of the Deed of Trust, the Owner or the
Operator shall immediately deliver to the Bank (i) originals of
all of the alcoholic beverage licenses issued for the continual
operation of the Property and will cooperate with the Bank to
ti
effectuate a full assignment, conveyance and transfer of such
20102343 041492 5 r V
alcoholic beverage licenses (which assignment, conveyance and
transfer shall be approved and consented to by the Department
of Alcoholic Beverage Control and by any other applicable
agencies), so that the smooth and continual operation of the
Property is not impaired or hindered, and (ii) all room keys
and lock combinations to the Property.
Section 6. Transfer of Real Pro ert . If the Bank
acquires the Owner's nterest in the Property, the Bank shall
give notice to the Operator. The Bank may, at any time after
such acquisition and upon ten (10) days prior written notice to
the Operator, terminate the Operating Agreement and all of the
rights of the Operator thereunder. The Bank agrees to
reimburse the Operator for such actual costs incurred by the
Operator and verified in writing to the Bank after such
termination, in connection with a payout or relocation or other
out-of-pocket expenses not to exceed $100,000 in the aggregate.
Unless the Bank exercises its right to terminate the Operating
Agreement , the Operating Agreement and the Operator's rights
thereunder shall continue in full force and effect. For the
period of time that the Operating Agreement continues in full
force and effect, the Operating Agreement shall not be altered,
terminated or discharged, except in accordance with the terms
of the Operating Agreement or as set forth in this Section 6 or
in Section 7 hereof, and the Operator shall be bound to the
Bank under all the terms, covenants and conditions of the
Operating Agreement for the balance of the term and any
renewals thereof, with the same force and effect as if the Bank
were the owner under the Operating Agreement. The Bank and the
Operator shall not be (i) liable for any act or omission of the
Owner under the Operating Agreement, (fi) liable for or
obligated to cure any defaults of the Owner under the Operating
Agreement which occurred prior to the transfer of the Property
to the Bank, (iii) subject to any offsets or defenses,
including, without limitation, the benefit of any prepayments
made, which the Operator may be entitled to assert against the
Owner, or (iv) bound by any amendment or modification of the
Operating Agreement made without the consent of the Bank. Upon
termination of the Operator as set forth hereinabove or in
Section 7 hereof, Operator shall use good faith efforts to
assist the Bank in any reasonable manner to provide any orderly
transition to a new manager.
Section 7. Termination Due to Acts of the Operator.
Notwithstanding anything set fort n Secon ereof to the
contrary, in the event a Default occurs and is continuing, and,
in the reasonable judgment of the Bank, such Default is a
result of the actions or inactions of the Operator, then the
Bank may terminate or cause to be terminated the Operating
Agreement and all rights of the Operator thereunder, if any.
20102343 041492 - 6
05-19-92 02:13"rb! ROM PILLSPU,-.F, MADISON TO 1714374159 P004/006
SECTION 7. Govern in I,aw . Th ip, Antf- ndment shall he
governed by, and cons rldnwith, the lawa of
the State of Taiifornia.
SIXTI(W Q. '*.a rot~1ercric. ""i Wirar.t.. . It? l:csre.by
agrees that ail;' f3i{itiL:w y 11?a_f;y" k? [ i :.+:t i.iZ' I j1t'. 1. Ic] ilgs 0f
SaSoo Elartric shall nut reduen, and a ro in addition in,
RM' s oLilgat long: under t ne Guarhnty, , as •:mane!"" h Vaby .
Guartt=r:
Guarnntor. _ _ -
..;sue!•{_11�� _ .. _ .. �. . ._..._�
n YI ,
rest w < < th ,{abort L. Mayer
'rust of 102, ci_ ted Juno 27,
1982, as ,z:^trldod
Bank: - '
TnS D I-ICUI tAXW HANK, VrD.
Ins Angeles Agency
By I
Name: r`+1lT1�itIrL1 Itch
Title., Vive !resident & A89t. Coneral Manager
ZOIC1491
- 6 -
r�.
Section B. The Bank Bound. Subject to the provisions of
Sections 6 and 7 hereof* t e Bank shall succeed to the
interests of the Owner under the Operating Agreement, the Bank
shall be bound to the Operator under all of the terms,
covenants and conditions of the Operating Agreement, and the
Operator shall, from and after the Bank's succession to the
interests of the Owner under the Operating Agreement, have the
same remedies against the Bank for the breach of any provision
contained in the Operating Agreement that the Operator might
have had under the Operating Agreement against the Owner if the
Bank had not succeeded to the interests of the Owner under the
Operating Agreement.
Section 9. Termination By Operator. The Operator agrees
that in the event o any a cult by the Owner under the
Operating Agreement, the Operator will give written notice to
the Bank thereof and the Bank shall have the right, but not the
obligation, to cure such default within 60 days from the Bank's
receipt of such notice, notwithstanding any different grace
period provided in the Operating Agreement.- Subject to the
provisions of Section 7 above, the Operator agrees not to
terminate its performance under the Operating Agreement unless
such 60 day period has expired without a cure of the default by
either the Bank or the Owner, or without the Bank or the Owner
commencing and diligently pursuing such cure to completion.
Section 10. Security Interest in Receivables. The Owner
has granted the Ba a security interest pursuant to the Deed
of Trust in all accounts receivable and all rights of the Owner
to payment for room rentals, food and beverage operations or
otherwise with respect to the Owner's interest in the Property
or any proceeds thereof. Operator hereby acknowledges such
security interest and agrees, for the benefit of the Bank, that
upon its receipt of a notice of the occurrence of a Default (a
"Notice of Default•), all such accounts receivable and proceeds
thereof (including but not limited to all cash held by the
Operator under the Operating Agreement in the Hotel Bank
Account, as defined in the Operating Agreement) or any hotel
operating accounts as funds available for distribution payable
to the Owner) will be held in trust for the Bank or turned over
to the Bank, as the Bank shall direct. The Owner hereby
authorizes and directs the Operator, after the Operator's
receipt from the Bank of a Notice of Default, to act in
accordance with any instructions received from the Bank with
respect to the holding of any such accounts receivable and the
proceeds thereof in trust for the benefit of the Bank and to
turn the same over to the Bank at such time as the Bank shall
direct. The Owner and the Operator hereby agree that the Hotel
Bank Account shall be held at Dai-Ichi Kangyo Bank of
California, which account is referred to as the Operating
Account in the First Amendment.
20102343 041492 - 7 "'
�- Section 11. Additional Rights of Bank. The Owner and the
Operator agree that the fo owing shall effective so long as
any obligation under the Credit Agreement shall remain dues
(a) Whenever the approval of the Owner or the Operator
are required under the Operating Agreement for any material
change or use in the operation or use of the Hotel or
expenditures other than in the ordinary course of business in
excess of $5,000 per occurrence or $25,000 annually, the
approval of the Bank shall also be required. The Bank shall
give written notice of approval or disapproval within a
reasonable time.
(b) Upon the request of the Bank, and at the expense of
the Owner, the Bank shall have the right to audit the records
of the Operator kept in connection with the operation and
maintenance of the Hotel. The Operator agrees to make
available such records as the Bank or its agents shall request.
(c) Copies of all monthly, quarterly and annual reports
and financial statements required to be delivered to the Owner
by the Operator under the Operating Agreement shall be
concurrently supplied by the Operator to the Bank.
(d) Upon request by the Bank from time to time, the
Operator will deliver to the Bank copies of such other
documents and materials delivered by the Operator to the Owner
in connection with the Operating Agreement as the Bank may
reasonably request.
Section 12. Nominee. All rights and powers of the Bank
provided for here in�-respect to the transfer or ownership
of the Property, succession to the rights of the Owner,
termination of the Operating Agreement and the limitation of
liability contained in Section 6 shall be for the benefit of a
nominee of the Bank. For any such nominee, such limitation of
liability shall apply, in addition to the Owner, to the sets of
any successor to the Owner, including the Bank.
Section 13. Governing Law. This Agreement shall be
governed by and construe in accordance with the laws of the
State of California. This Agreement shall inure to the benefit
of and shall be binding upon the Bank, the Operator and the
Owner and their respective successors and assigns. This
Agreement may not be modified or amended except in writing
signed by all parties hereto and the Bank. if any one or more
of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provisions of this Agreement, but this
20102343 041492 - 8 - Y
is
Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
Section 14. Notices. All notices and other
communications to eb�ven to any party hereunder shall be in
writing and shall be given to such party at its address or
telecopy number set forth below or such other address or
telecopy number as such party may in the future specify for
such purpose by notice to the other parties. Each such notice
or communication shall be effective (i) if given by telecopy,
when such telecopy is received, (ii) if given by mail, 5 days
after such communication is deposited in the mail with first-
class postage prepaid, addressed as aforesaid, or (iii) if
given by any other means, when delivered at the address
specified belowi
To the Owner: waterfront Construction 41,
A California Limited Partnership
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
Attn: Stephen K. Bone
Robert L. Mayer
Telephoner (714) 759-0091
Telecopier: (714) 720-1017
To the Operator: Destination Properties, Inc.
c/o The Waterfront Hilton
21100 Pacific Coast Highway
Huntington Beach, CA 92648
Attn: /t1 �C Nr4 Fc /� • 1 r s
Telephone: i4. 6c -90 0
Telecopier: 7/4• 6o- 2i7
To the Bank: The Dai-Ichi Kangyo Bank, Ltd.
Los Angeles Agency
770 Wilshire Boulevard
Los Angeles, CA 90017
Attn: Business Development
Department 2
Telephone: (213) 612-6400
Telecopier: (213) 624--5258
Section 15. Operator Bound. The Operator hereby agrees
to abide by and be bound y t e provisions of Sections
4(a)(iii), 4(a)(1v) and 7 of the First Amendment.
20102343 041492
- 9 -
PO
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written,
OWNERz WATERFRONT CONSTRUCTION O,
A CALIFORNIA LIMITED PARTNERSHIP
By: THE WATERFRONT, INC.,
a California corporation
General Partner
By: •;u, '
Robert L. hayer
Chairman of the board
and Chief Financial
Officer
OPERATOR: DESTINATION PROPERTIES, INC.,
a California corporation
04'10A�'te,,e,�:2
Robert L. Mayer
Chairman of the Board
Michael A. Aullis
President
BANKt THE DAI-ICHI KANGYO BANK, LTD.
Los Angeles Agency
Byt
Name:
Title:
20102343 041492 - 10 -
10yo
05-1:-92 :?:13FbIIF F.OM Fi=:Z_ :.Y, MADIS0,1 i0 17I'3741590 P006/006
IN WITNESS WIIEREOF, the parties have executed this
Agreement as of the date first abovo written.
OwN�:�t: k�A�r�:Rl~Ror;T CONSTRUCTION # I , -
A CALtFORNIA LIMITUP PARTNERSHIP
OPERATOR:
By: THE WATERFRONT, INC.,
a 011 i ZUrfi i a t.c,L 1,Q1:ation
e CAne:ral Partner
L. � Mayor
LJL iT'lran 4A the' godr-d
eerld Chiaf Vinartcial
Officer
DESTrNAT! 011 Nfilrl't:R 1 LS, INC.,
a California carpuraLion
Robert L: Mayer
Chairman of the Board'
Itl ----
Michael A. null.is'-.
• Prhsident
HANK* THE DA i • I CH 1 1:At4{;l'0 IIANY•", I.Tr• .
Loy Angc' i Fl,S A(Ir.- cy
L
Sys t - . - •�.�•�
Nilme:Tsu:14 har« Ir.11:
Title. -Vic"' Pry A(J--F!i e.-ASSt, Genera: %ln.lger
2010231.3 041492 10
3 j-28-92
1 1: 1 2AM MSYC& R Newpo r t B e a c h CA PO
MKING, YOCCA, COBON & RAIR
A Professional Corporation
660 Newport Center Drive. Suite 1600
Telephone:
(7I4)
72$..4000
Newport Beach, Gl 92660-644I
Fix:
V14j
725-4100
Date: _ 7 f2r/_ it ,
7M FOLU)WINC DOCUMB7 INCLG'DIrill 7EIS COVfR SHEET 15 PAM
PLUME DELIVER TO:
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NAME/CPAh'Y:
FAQ(
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iMAGE:
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CLIENT NAME/MATM NO.:
IF ANY OF THESE PACES ARE NOT LM I BLE OF. YOU DO NOT RECEIVE ALL OF THE PAGES,
PLEASE CALL (714) 725-4014.
CONFIDENTIALITY NOTICE
THIS VESSAUE IS II+itMED ONLY FOR 311E USE OF THE INDIVIDUAL OR ENTITY TO WHICH
IT IS ADDRESSED, AND MAY CONTAIN INFOWTIONVAT IS PRIVILEGED, CDNFIDENTIAL
A.N'D MK FRONT DISCLOSURE UNDER APPLICABLE LAW. IF THE READER OF IH I S
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L'S IkWDIATELY BY TELEPHONT.. AND RETURN THE ORIGINAL NESSACE-TO i.'S AT THE
ABOVE ADDRE55 VIA THE U.S. POSTAL SERVICE. WX YOU.
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June 25, 1992
Connie Brockway, City Clerk
City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
40m% L. Ml.GALa.r4Cs
Ai1.A C. 2*9"t
or low"4k
W""%R•A WwafT f•.A..I
(714) 725-4195
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01
Re: post -Closing Certif ate for Agency/Morgan Guaranty
Credit agreement
Dear Connie;
- Enclosed please find th Certificate of The Dai-lebi Kan a
Bank, Ul), which was deliverer to us following the close o
"the=US_ -Waterfront escrow. Ths Certificate will complete your
set- f-rla-Wa documents. I am also enclosing a copy of the
Closing Memoianaq!W::Yetinq all closing documents, to assist you
n or Uerg a i16cumenta.
Thank you again for your help in facilitating this rather
complicated closing, and I particularly appreciated your kind
thoughtfulness in copying and collating the several copies of
closing documents.
Very truly yours,
STItA UNG YOCCA, CARLSON k RAUTH
Jo n G. McClendon
JGM/nke
0337m/31/2460-57
Enclosures
rRITZ R. STRAOLING
NICA 6. TOCCA
C. CRAIO CARLSON
WILLIAM R. PAUT14 M
K. C. SCMAAr
RICNARD G. GOODMAN
JDMN J. Mu**„T
TMOZAS Pc CLARK. a.
SIN A. rRTDMAN
DAVID R..MIWIN
PAUL L. GALE
RUD*LPH C. SHEPARD
RODENT J. NAME
M. D. TALSOT
SRUCE C. STUART
E. KURT VCAGIR
NOSERT J. WHAUM
ROS[RT E. RICH
TNOMAS A. PIs-ME
RANDALL J. SMERYAN
SRUCE W. FIVCMTER
MARK J. MVISSCM
KAREN A. ELLIS
COZASETM C. GREEN
■RUCE D. MAT
DONALD J. MANNAN
JOHN J. SWIGAR ' JR.
MICNA66 A. ZASLOCKI
NEILA R. S[RNSTEIN
CELESTE STAML SRADY
CMR•STOPMER J. KILPATRICK
JOEL M. GUTM
JULIE WCOT AKIN*
DAWY C. MONEYWILL
OWEM S. LUSOW
LAWRENCE S. COHN
STRADLING, YOCCA, CARLSON & RAUTH
MARLEY L. SJELLAND A PROFESSIONAL CORPORATION
07EP4KN T. rREENAN ATTORNEYS AT LAW
POSERT A. w14.0N
L A. NICHOLAS J.. YOCCA 660 NEWPORT CENTER DRIVE. SUITE 1600
MIG MO
JULIE M, PORTER POST OrFICE OOx 7660
MAR% T. PALIM
MICMAIL R. r}TMN NEWPORT •EACH. CALWORNIA 92660.6441
MOMENT C. rUMSTIN
ALETA LOUISE SRTA14T
RONALD A. VAN ■LANCOM
STEPHEN M. M-NAMARA
GARY A. PEMSERTON
CAROL L. LEW
DEMISE MANSAUOM MIRING
SARSARA ZEIP LEISOLO
JON E. GOETZ
ALAN J. KISSEL
GARY PL DOWNS
JOHN O. IRELAND
..ICMAEL J. PENDERGAST
DAVID M. MAMN
CHRISTOPHER M. NOROPOULOS
DAM^ M. RKZMOM
DARRTL S. GISSON
JOMN D. M.CLENOON
TODD R. TMAKAR
RICHARD T. MEEDMAN
RODENT C. WALLACE
DAMON C. MOSLEM
GERARD L. OSKAM
JOHN r. CANNON
JOMN L wOOOMEAO IV
OOVOLAS R rZICK
WILLIAN J. MORLET
TELEPHONE (714) 125.4000
TELEPHONE (714) E4O.7035
FAR MUNSER
(7141 7Z5•A100
June 15, 1992
Connie Brockway, City Clerk
City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
JOHN E. SRICAENRIDOE
REMA C. STONE
OF CDYNy EV
WRITER'S DIRECT DIAL:
(714) 725-4185
Re: Post -Closing Certificate for Agency/Morgan Guaranty
Credit Agreement
Dear Connie:
Enclosed please find the Certificate of The Dai-Ichi Kangyo
Bank, Ltd., which was delivered to us following the close of
the DKB-Waterfront escrow. Ths Certificate will complete your
set of closing documents. I am also enclosing a copy of the
Closing Memorandum listing all closing documents, to assist you
in ordering the documents.
Thank you again for your help in facilitating this rather
complicated closing, and I particularly appreciated your kind
thoughtfulness in copying and collating the several copies of
closing documents.
Very truly yours,
STRADLING, YOCCA, CARLSON & RAUTH
Jo n G. McClendon
x z
JGM/nkc
0337m/51/2460•-57
Enclosures 7 �1 M o
s�
lam:
CERTIFICATE OF THE DAI-ICHI KANGYO BANK, LTD.,
APPROVING THE THIRD AMENDMENT TO
DISPOSITION AND DEVELOPMENT AGREEMENT
By and Among THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH,
ROBERT L. MAYER, as Trustee of the
Robert L. Mayer Trust of 1982,
dated June 22, 1982, as amended, and
WATERFRONT CONSTRUCTION NO. 1,
a California limited partnership
The undersigned, The Dai-Ichi Kangyo Bank Ltd., Los
Angeles Agency (the "Bank"), hereby states and certifies the
following (all the terms used herein without definition shall
have the meanings assigned to such terms in the "Third
Amendment to Disposition and Development Agreement By and Among
The Redevelopment Agency of the City of Huntington Beach,
Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of
1982, dated June 22, 1982, as amended, and Waterfront
Construction No. 1, a California limited partnership," dated
March 16, 1992 (the "Third Amendment")):
(i) The Bank approves and consents to those terms
and conditions of the Third Amendment which pertain to the Bank
and, except as provided in the Third Amendment, releases any
right, title and interest that it might otherwise have in any
revenues payable by the Agency, including interest thereon,
with respect to Separate Development Parcel No. 1 under
Paragraph 5 of Attachment No. 5 of the Existing DDA which
constitute Property Tax Increment, Transient Occupancy Tax and
any other revenues lawfully available to the Agency and the
Bank has no pending claim against the Agency payable'from such
revenues; and
(ii) Except as provided in the Third Amendment, the
Bank has no other claim of right, title or interest under the
Existing DDA; and
(iii) The Bank approves and accepts the payment by the
Agency to the Bank as set forth in Section 5 of the Third
Amendment as complete, full and final consideration and
satisfaction for the Bank's release of its security interest in
the revenues payable by the Agency under Paragraph 5 of
Attachment No. 5 of the Existing DDA, with respect to Separate
Development Parcel No. 1 (the Waterfront Hilton); and
(iv) The Bank specifically certifies that it shall
extend the due date of the facility provided by it under the
Credit Agreement dated as of March 31, 1989, between Waterfront
Construction No. 1 and the Bank, as amended by the First
Amendment to Credit Agreement dated March 31, 1992, to
January 1, 1993.
Dated: May 1992 THE DAI-ICHI KANGYO BANK, LTD.,
Los Angeles Agency
Its: Vice President S Asst. General Manager
05/06/92
03230/2460-57 - 2 -
t
CLOSING MEMORANDUM
HUNTINGTON BEACH REDEVELOPMENT AGENCY
$4,300,000 MORGAN GUARANTY LOAN FACILITY
City of Huntington Beach -
Redevelopment Agency City
Attorney/Agency Attorney
May ! , 1992
Stradling, Yocca, Carlson & Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, CA 92660
Certified copy of Ordinance
No. 1285 establishing
Redevelopment Agency
Certified copy of Agency
Resolution No. 1
Main Pier Redevelopment Plan
(the "Plan")
Certified copy of Ordinance No.
2578 adopting the Plan
Certified copy of Ordinance No.
2634 amending the Plan
- Certified copies of City
Resolutions No. 6362 and
No. 6370, consenting to Agency
approval of Credit Agreement
- Certified copies of Agency
Resolutions No. 226 and No. 228,
approving Credit Agreement
- City Attorney/Agency Attorney
Opinion
- Agency Secretary's Certificate
- Executive Director's Certificate
- Certified copies of 3d and 4th
Amendments to Waterfront DDA
- Agency Certificate to SYCR
regarding one loan senior to
Credit Agreement
PeII tY
Mayer/Waterfront - Fully executed Amended Credit
Agreement between waterfront
Construction No. I and Dai-Ichi
Kangyo Bank, including Exhibits
and Schedule attached thereto
- Litigation Certificate from
Mayer/Waterfront as to pending -
litigation involving
Mayer/Waterfront
Certificate from
Mayer/Waterfront acknowledging
release of any right, title and
interest in Transient Occupancy
Tax and Tax Increment revenues,
including interest, pursuant to
Paragraphs 4 and 5 of Attachment
No. 5 to the DDA with respect to
Separate Development Parcel No.
Certificate from Dai-Tchi-Kangyo
Bank (i) approving Third
_ Amendment, (ii) releasing any
�;- right, title and interest in
d J( revenues payable by Agency
pursuant to Section 8(11) of
`f
Third Amendment to the DDA, anc � (iii) extending due date on it,
v loan to Mayer/Waterfront to
December 31, 1992 .�
Stradling, Yocca, Carlson - Special Counsels opinion
& Rauth
- Litigation docket search update
Morgan Guaranty Trust - Execution copies of Credit
("Bank`) Agreement
- Execution copy of Note
White & Case
Counsel for Bank
05/06/92
03060/2460/57 - 2 -
1
IR
'_
TH E WATERFRONT
May 20, 1992
Gail Hutton, Esq.
City Attorney
CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach, California 92648
Thomas P. Clark, Jr., Esq.
STRADLING, YOCCA, CARLSON & RAUTH
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Re: Redevelopment Agency Credit Agreement and Note
with Morgan Guarantee Trust Company of New York
Dear Sirs:
The current business operations of Robert L. Mayer (hereinafter the "Mayer Entities")
consist of Robert L. Mayer as Trustee of the Robert L. Mayer Trust of 1982, dated June 22,
1982, as amended; The Robert Mayer Corporation, a California corporation; The
Waterfront, Inc., a California corporation; and Waterfront Construction #1, a California
limited partnership for which The Waterfront, Inc. is the sole general partner. For your
information, one or more of the Mayer Entities is party to the following lawsuits:
Waterfront Construction # 1 v. J. A. Jones Construction Company, et al. and related
cross -action, Orange County Superior Court Case No. 657682;
R & D Fire Protection Company, v. J. A. Jones Construction Company, et al.,
Orange County Superior Court Case No. 674606;
E. F. Brady Company, Inc. v. J. A. Jones Construction Company, et al., Orange
County Superior Court Case No. 647630;
SASCO Electric v. J. A. Jones Construction Company, et al., Orange County Superior
Court Case No. 654338;
The above matters are disputes arising in connection with the construction of The
Waterfront Hilton Hotel.
The Robert Mayer Corporation
660 Newport Center Drive, Suite 1050, P.O. Box 8680, Newport Beach, CA 92658-8680 • Telephone (714) 759-8091
ti
Kydd v. Janes, et el., Orange County Municipal Court Case No. 177700
Solvay v. Jones, et al., Orange County Municipal Court Case No. 177701
Sisker, et al. v. Jones, et al., Orange County Municipal Court Case Nos. 177702,3,4
ualman v. Jones et al., Orange County Municipal Court Case No. 177705
DeFrancesco v. Jones, et al., Orange County Municipal Court Case No. 177708
Coffman v. Jones, et al., Orange County Municipal Court Case No. 177709
Barng_rover v. Jones,, et al., Orange County Municipal Court Case No. 177710
Wahrenbrock v.Jones, et al., Orange County Municipal Court Case No. 177711
Simm, et al. v. Jones, et al.. Orange County Municipal Court Case Nos. 177716,17
Harm v. Jones, -et-al. , Orange County Municipal Court Case Nos. 182378
The above matters relate to claims by a group of residents in the neighborhood that
they were injured by dust created during the construction of The Waterfront Hilton
Hotel. In January of 1992 the plaintiffs' counsel granted us an open extension of
time to respond to the complaints and we have tendered our defense to J. A. Jones
Construction Company. To the best of our knowledge Jones and their insurance
carrier are pursuing settlements with all the parties.
Ryder Truck Rental, Inc. v. The Robert Mayer Corporation, et al., San Bernardino
County Superior Court Case No. RCV 062105
The above matter is a dispute arising from damage to a rental truck rented by the
Quality Inn Hotel in Las Vegas, Nevada which is owned by the Robert L. Mayer
Trust.
To the best of our knowledge the above lawsuits do not adversely affect the ability of the
Redevelopment Agency of the City of Huntington Beach to perform its obligations under
its Credit Agreement and/or Note with Morgan Guarantee Trust Company of New York nor
do they affect the legality, validity or enforceability of said Credit Agreement or Note.
Additionally, there is no pending, or to the best of our knowledge after due inquiry,
threatened action, suit, investigation or proceeding against or affecting the Mayer Entities
before any court, governmental agency or arbitrator which may adversely affect the ability
of the Redevelopment Agency of the City of Huntington Beach to perform its obligations
under its Credit Agreement and/or Note with Morgan Guarantee Trust Company of New
York or which purports to affect the legality, validity or enforceability of said Credit
Agreement or Note.
Sincerely,
c._
&ob Maye
for the Mayer Entities
-2-
THEWATERFRONT
May 1:! , 1992
Gail Hutton, Esq.
City Attorney
CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach, California 92648
Thomas P. Clark, Jr., Esq.
STRADLING, YOCCA, CARLSON & RAUTH
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
CERTIFICATE OF RELEASE OF INTEREST IN CERTAIN TAX REVENUES
Dear Sirs:
I, the undersigned, Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982, dated
June 22,1982, as amended ("Mayer") and as Chairman of the Board of The Waterfront, Inc.,
a California corporation and general partner of Waterfront Construction #1, a California
limited partnership do hereby certify as follows:
a. The undersigned has all necessary trust and corporate authority to execute this
certificate on behalf of Mayer and Waterfront.
b. The Redevelopment Agency of the City of Huntington Beach (the "Agency")
and Mayer are parties to that certain Disposition and Development
Agreement dated August 15, 1988, as amended by the First Amendment to
Disposition and Development Agreement dated June 17, 1991, the Second
Amendment to Disposition and Development Agreement dated as of August
1, 1991, the Third Amendment to Disposition and Development Agreement
dated as of March 16, 1992 and the Fourth Amendment to Disposition and
Development Agreement dated as of April 20,1992 (collectively the "DDA").
All capitalized terms not defined herein shall have the meaning set forth in
the DDA.
The Robert Mayer Corporation
660 Newport Center Drive, Suite 1050, PO. Box 8W, Newport Beach, CA 92658-8680 • Telephone (714) 759-8091
C. It is hereby acknowledged and certified that upon Agency's payments in
accordance with Paragraphs 3, 4 and Subparagraph (ii) of Paragraph 5 of the
Third Amendment, Mayer and Waterfront has released its interest in the Tax
Increment revenues which are payment obligations of the Agency to Mayer
and Waterfront, including interest thereon, under Paragraphs 4 and 5 of
Attachment No. 5 to the DDA with respect to Separate Development Parcel
No. 1 (The Waterfront Hilton).
d. It is hereby acknowledged and certified that upon Agency's payments in
accordance with Subparagraph (i) of Paragraph 5 of the Third Amendment,
Mayer and Waterfront has released its interest in the Transient Occupancy
Tax revenues which are payment obligations of the Agency to Mayer and
Waterfront, including interest thereon, under Paragraphs 4 and 5 of
Attachment No. 5 to the DDA with respect to Separate Development Parcel
No. 1 (The Waterfront Hilton).
e. It is hereby acknowledged and certified that Agency's payments in accordance
with Paragraphs 3, 4 and 5 of the Third Amendment shall be in lieu of and
shall constitute a full and final settlement, payment, and discharge of all of
Agency's payment obligations, including interest thereon, under Paragraphs 4
and 5 of Attachment No. 5 to the DDA with respect to Separate
Development Parcel No. 1 (The Waterfront Hilton), including without
limitation payment of the "Phase 1 Paragraph 5 Costs" referenced in
Paragraph 1 of the Second Amendment.
Sincerely,
Robert L Mayer, as Trustee of
the Robert L. Mayer Trust of 1982,
dated June 22, 1982, as amended
Robert L Mayer, Trus
-2-
Waterfront Construction # 1
a California Limited Partnership
by The Waterfront, Inc.
a California corporation,
its sole general partner
Robert L Mayer
Chairman of the Board
The Waterfront, Inc.
CERTIFICATE OF THE REDEVELOPMENT AGENCY
OF THE CITY OF HUNTINGTON BEACH
REGARDING LIENS ON MAIN PIER
PROJECT AREA TAX REVENUES
Stradling, Yocca, Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
The undersigned, THE REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH (the "Agency") hereby states and certifies the
following tall the terms used herein without definition shall
have the meanings assigned to such terms in the "Credit
Agreement" between the Agency and Morgan Guaranty Trust Company
of New York ("Morgan"), dated May r?df" , 1992):
With the exception of the loan made by the Huntington
Beach Public Financing Authority (the "Authority") to
the Agency from the proceeds of the sale of the
Agency's Huntington Beach Redevelopment Projects 1988
Revenue Bonds, Series A, pursuant to that certain loan
agreement, dated as of May 1, 1988, among the Agency,
First Interstate Bank of California, and the Authority
(the "Senior Loan"), Morgan's security interest in the
Available Tax Revenues is not subject to any lien with
a right of payment senior to the Agency's obligations
to Morgan under the Credit Agreement.
Dated: May -'� d , 1992
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
Michael T. Uberuaga,
Executive Director
05/06/92
04790/2460/57 — 1
FINITE R. STRADLING
NICK C. TOCCA
C. CRAIG CARLSON
WILLIAM R. RAVTN RI
it. C. SCNAAF
RICMARD C. GOODMAN
JOMN J. MURPMY
THOMAS P. CLARR. JR.
BEN A. FRVOMAN
DAVID R. M.Ew[N
PAUL L. GALE
O RUDLPM C. SNEPARD
ROS;RT J. KAN[
M.O.TALSOT
BRUCE C. OTIAART
E. RIJRT Y[AGER
POS;RT J. WMALEN
wOSEPT E. P@CM
TMOMAS A. PISTON;
RANDALL J. SM;RMAN
*RUC; W.P;UCMT;R
MARK J. MV[SSCM
KAREN A. [LLI*
It61ZAMCTM C. GRE;N
*RUCE D. MAY
DONALD J. MAMMAN
JOMN J. SWIGART. JR.
MIC"AEL A. RAELOCKI
NI ILA R. BERNST[.N
CELESTE SYANL SRAOV
CnwIBTOPNER J. KILPATRICK
JOEL N. GVTM
JULIE AMCOY AKINS
DAWN C. MONEYW[LL
Owe S. LUSOW
LAMRENCE S. CONN
STRADLIN0, YOCCA, CARLSON & RAUTH
STEPM[N H. LACOVNT A PROFESSIONAL CORPORATION
MARLEY " BJ;LLANO
sTEPM[N T. FR[[MAN ATTORNEYS AT LAW
ROBERT A. WILSON 660 NEWPORT CENTER DRIVE. SUITE 1600
CM[RTL A. DOW
NICMOLAS J. TOCCA POST OFFICE SOX 7660
JULIE M. PORTER
MARK T. PALIN NEWPORT REACH, CALIFORNIA 92660-6441
MICNAEL E. FLYNN
ROBERT C. PUNSTEN
ALETA LOUISE BRYANT
RONALD A. VAN BLARCOM
ST[PMCN M. FM"AMARA
GARY A. PEMBERTON
CAROL L. LE W
D;NIS; MARBAUGM MERINO
BAR BABA ERIC LEIBOLD
JON [. GOETZ
ALA" J. K[SS[L
GARY P. DOWNS
JONN D. IRELAND
MICNA[L J. PENDEROAST
DAVID !6 MANN
CNRISTOPMER M. MOROPOV LOS
CANA M. KEZMOM
DARRYL S. GISSON
JOMN G. M.CL[NDON
TODD w. TMARAIR
PICNARO T. N[[DNAM
ROS[RT C. WALLACE
DAMON C. MOSLER
GERARD L. OBRAM
JONN f. CANNON
JOHN E. WOOONEAD IV
DOUGLAS R F[ICK
WILLIAM J. "ORLEY
TELEPHONE (714) 725.4000
TELEPHONE (714) 640-7035
FAx NUMBER
17141 725.4-00
May ZO , 1992
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
JOMN E. BRECKENRIDGE
R[NA C. STONE
OF COVN&[L
WR,T[w'S C4PECT DIAL:
(714) 725-4000
Re: Credit Agreement, dated as of May LO_, 1992, between
Morgan Guaranty Trust Conpany of New York and The
Redevelopment Agency of the City of Huntinotgn Beach
Ladies and Gentlemen:
We have acted as special counsel to The Redevelopment
Agency of the City of Huntington Beach (the "Agency"). We are
familiar with the matters relating to the preparation,
execution and delivery of a Credit Agreement, dated as of
May 2Q, 1992 (the "Credit Agreement"), between the Agency and
you (the "Bank"). Terms defined in the Credit Agreement are
used herein as therein defined.
We have examined the originals, or copies certified to our
satisfaction, of (i) the Agency's fully executed counterpart of
the Credit Agreement, including all Exhibits and Schedules
attached thereto; (ii) such other corporate records of the
Agency, certificates of public officials and of officers of the
Agency, (iii) the agreements, instruments and documents which
affect or purport to affect the obligations of the Agency under
the Credit Agreement, and (iv) such other agreements,
instruments and documents as we have deemed necessary as a
basis for the opinions hereinafter expressed.
We have assumed the due execution and delivery of the
Credit Agreement by the Sank. We have also assumed the
Morgan Guaranty Trust Company of New York
May W , 1992
Page 2
genuineness of all signatures and the authenticity of all
documents executed in connection with the transaction submitted
to us as originals, and the conformity with the original
documents of all documents submitted to us as copies. We have
further assumed that interest on the Note is not excludable
from gross income for federal income tax purposes.
Based upon the foregoing and upon such investigation as we
have deemed necessary, we are of the opinion that:
1. The execution, delivery and performance by the Agency
of the Credit Agreement and the Note is within the
Agency's powers, have each been duly authorized by
necessary governmental action, (i) do not contravene
or violate any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree,
determination or award presently in effect and having
applicability to the Agency, (ii) will not result in a
breach of the "DISPOSITION AND DEVELOPMENT AGREEMENT
By and Among THE REDEVELOPMENT AGENCY OF THE CITY OF
HU11TINGTON BEACH, ROBERT L. MAYER, as Trustee of the
Robert L. Mayer Trust of 1982, dated June 22, 1982, as
amended, and WATERFRONT CONSTRUCTION NO. 1, a
California limited partnership" or any of the
amendments thereto, and (iii) to the best of our
knowledge, will not result in, or require, the
creation or imposition of any lien upon or with
respect to any other properties now owned or hereafter
acquired by the Agency.
2. No further authorization, consent or approval or other
action by, and no further notice to or filing or
registration with, any governmental authority,
regulatory body or court is required for the due
execution, delivery and performance by the Agency of
the Credit Agreement and the Note.
3. Each of the Credit Agreement and the Note has been
duly executed and delivered by the Agency and is the
legal, valid and binding obligation of the Agency
enforceable against the Agency in accordance with its
terms (except with respect to any indemnification
provisions, as to which we express no opinion).
Morgan Guaranty Trust Company of New York
May 7,0_, 1992
Page 3
4. The Agency is authorized to pledge, and pursuant to the
Credit Agreement has validly pledged, to the Bank the
Available Tax Revenues as security for the payment and
performance of the Agency's obligations to the Bank
under the Credit Agreement. Such pledge is a valid and
binding obligation of the Agency enforceable against
the Agency and its successors and assigns. The Bank's
security interest in the Available Tax Revenues is not
subject to any lien with a right of payment senior to
the Agency's obligations to the Bank under the Credit
Agreement with the exception of the Senior Loan.
5. The Agency does not enjoy any rights of immunity from
being sued for any default of its obligations under the
Credit Agreement, as California Health and Safety Code
Section 33125 expressly provides that a redevelopment
agency may be sued.
The opinions set forth above are subject to the following
qualifications:
(a) The enforceability of the Agency's obligations under
the Credit Agreement and Note are subject to the effect
of applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights
generally.
(b) The enforceability of the Agency's obligations or the
termination of the Agency's rights under the Credit
Agreement and Note may be subject to general principles
of equity including without limitation, concepts of
materiality, reasonableness, good faith and fair
dealing and the possible unavailablity of specific
performance and injunctive relief, (regardless of
whether such enforceability is considered in a
proceeding in equity or at law) and by the exercise of
judicial discretion in appropriate cases.
(c) We are members of the State Bar of California and
accordingly do not purport to be experts on, or to be
qualified to express any opinion herein concerning, nor
do we express any opinions herein concerning any law
other than the federal laws of the United States of
America and the laws of the State of California,
excluding however, federal or state securities and
banking law.
Morgan Guaranty Trust Company of New York
May Z, 1992
Page 4
(d) The opinion set forth in the last sentence of
paragraph No. 4 has been rendered solely in reliance
on a certificate of the Agency stating that except for
one Senior Loan, the Available Tax Revenues are not
subject to any loan with a right of payment senior to
the Agency's obligations to the Bank under the Credit
Agreement.
We call attention to the fact that the foregoing opinions
may be affected by actions taken or events occurring after the
date hereof. We have not undertaken to determine, and herby
expressly disclaim any obligation to inform you, or any other
person, whether such actions or events are taken or occur.
This opinion is furnished to you pursuant to your request
and is for your benefit only and may not be relied upon by any
other person or delivered to any other person without our prior
written consent.
Very truly yours,
44X�I. /"/,
/ wcoc^v
STRADLING, YOCCA, CARLSON & RAUTH
0302Q/2460-57
OFFICE OF
CITY ATTORNEY
P. o. Box 2740
2000 MAIN STREET
HUNTINGTON BEACH
CALIFORNIA 02647
GAIL HUTTON
Gty Attorney
May 20, 1992
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260
TELEPHONE
(714) 536.6%5
PAX 714 374-1690
Re: Credit Agreement, dated as of May 20, 1992,
between Morgan Guaranty Trust Company of New York
and The Redevelopment Agency of the City of
Huntington Beach „.
Ladies and Gentlemen:
We have acted as general counsel to The Redevelopment Agency of the
City of Huntington Beach (the "Agency"). We are familiar with the
matters relating to the preparation, execution and delivery of a
Credit Agreement, dated as of May 20, 1992 (the "Credit Agreement"),
between the Agency and you (the "Bank"). Terms defined in the
Credit Agreement are used herein as therein defined. Among other
things, we have examined:
(1) the Agency's fully executed counterpart of the Credit
Agreement, including all Exhibits and Schedules
attached thereto; and
(2) Resolution No. 1 of the Agency, dated March 1, 1976,
as now in effect ("Resolution No. 10).
We have also examined the originals, or copies certified to our
satisfaction, of (i) such other corporate records of the Agency,
certificates of public officials and of officers of the Agency, (ii)
the agreements, instruments and documents which affect or purport to
affect the obligations of the Agency under the Credit Agreement, and
(iii) such other agreements, instruments and documents as we have
deemed necessary as a basis for the opinions hereinafter expressed.
Morgan Guaranty Trust Company of New York
May 20, 1992
Page 2
We have assumed the due execution and delivery of the Credit
Agreement by the Bank. We have also assumed the genuineness of all
signatures and the authenticity of all documents executed in
connection with the transaction submitted to us as originals, and
the conformity with the original documents of all documents
submitted to us as copies. We have further assumed that interest on
the Note is not excludable from gross income for federal income tax
purposes.
Based upon the foregoing and upon such investigation as we have
deemed necessary, we are of the opinion that:
1. The Agency is a redevelopment agency duly organized and
validly existing under the laws of the State of California
and has the power to own its properties and to carry on its
affairs as now being conducted.
2. There is no action, suit, investigation or proceeding
pending with service of process accomplished or, to the
best of our knowledge after due inquiry, threatened,
against or affecting the Agency before any court,
governmental agency or arbitrator which may adversely
affect the ability of the Agency to perform its obligations
under the Credit Agreement or the Note or which purports to
affect the legality, validity or enforceability of the
Credit Agreement or the Note.
3. The execution, delivery and performance by the Agency of
the Credit Agreement and the Note is within the Agency's
powers, have each been duly authorized by necessary
governmental action, and except as qualified below, will
not (a) contravene or violate any provision of the
ordinance pursuant to which the Agency was created or
Resolution No. 1 or any instrument or contractual
restriction binding on or affecting the Agency, or (b)
result in a breach of any instrument or contractual
obligation binding on or affecting the Agency.
The opinions set forth above are subject to the following
qualifications:
(a) With respect to No.-2 above, our due inquiry is based on a
search of the public records of the Superior Court of the
County of Orange and the United States District Court for
the Central District of California with an Orange County
Civil Index date through May 15, 1992, which Index date is
the most current Index date obtainable as of the date
hereof.
Morgan Guaranty Trust Company of New York
May 20, 1992
Page 3
(b) With respect to No. 3 above, we express no opinion herein
as to whether the execution, delivery and performance by
the Agency of the Credit Agreement and the Note will result
in a breach of that certain "DISPOSITION AND DEVELOPMENT
AGREEMENT By and Among THE REDEVELOPMENT AGENCY OF THE CITY
OF HUNTINGTON BEACH, ROBERT L. MAYER, as Trustee of the
Robert L. Mayer Trust of 1982, dated June 22, 1982, as
amended, and WATERFRONT CONSTRUCTION NO. 1, a California
limited partnership" or any of the amendments thereto.
(c) The enforceability of the Agency's obligations under the
Credit Agreement and Note are subject to the effect of
applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights
generally.
(d) The enforceability of the Agency's obligations under the
Credit Agreement and Note may be subject to general
principles of equity including without limitation, concepts
of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance and
injunctive relief, (regardless of whether such
enforceability is considered in a proceeding in equity or
at law).
(e) We are members of the State Bar of California and
accordingly do not purport to be experts on, or to be
qualified to express any opinion herein concerning, nor do
we express any opinions herein concerning any law other
than the federal laws of the United States of America and
the laws of the State of California, excluding however,
federal or state securities and banking law.
We call attention to the fact that the foregoing opinions may be
affected by actions taken or events occurring after the date
hereof. We have not undertaken to determine, and hereby expressly
disclaim any obligation to inform you, or any other person, whether
such actions or events are taken or occur, and with respect to Item
2 above, have been taken or occurred, after May 15, 1992.
This opinion is furnished to you pursuant to your request and is for
your benefit only and may not be relied upon by any other person or
delivered to any other person without our prior written consent.
Very truly yours,
GAIL HUTTON
Clt Attorney
W
w
�tuc�y
y �1
GAIL HUTTON
City Attorney
May 20, 1992
OFFICE OF
CITY ATTORNEY
P. O. BOX 2740
2000 MAIN STREET
HUNTINGTON REACH
CALIFORNIA 92647
CIS ATTORNEY/AGENCY-ATTORNEY OPINION
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260
TELEPHONE
(714) 5364M5
FAX 714 374.1690
Re: Credit Agreement, dated as of May 20, 1992,
between Morgan Guaranty Trust Company of New York
and The Redevelopment Agency of the City of
Hu1Rtinaton Beach _.
Ladies and Gentlemen:
we have acted as general counsel to The Redevelopment Agency of the
City of Huntington Beach (the "Agency"). We are familiar with the
matters relating to the preparation, execution and delivery of a
Credit Agreement, dated as of May 20, 1992 (the "Credit Agreement"),
between the Agency and you (the "Bank"). Terms defined in the
Credit Agreement are used herein as therein defined. Among other
things, we have examined:
(1) the Agency's fully executed counterpart of the Credit
Agreement, including all Exhibits and Schedules
attached thereto; and
(2) Resolution No. 1 of the Agency, dated March 1, 1976,
as now in effect ("Resolution No. 1").
We have also examined the originals, or copies certified to our
satisfaction, of (i) such other corporate records of the Agency,
certificates of public officials and of officers of the Agency, (ii)
the agreements, instruments and documents which affect or purport to
affect the obligations of the Agency under the Credit Agreement, and
(iii) such other agreements, instruments and documents as we have
deemed necessary as a basis for the opinions hereinafter expressed,
Morgan Guaranty Trust Company of New York
�••� May 20, 1992
Page 2
We have assumed the due execution and delivery of the Credit
Agreement by the Bank, we have also assumed the genuineness of all
signatures and the authenticity of all documents executed in
connection with the transaction submitted to us as originals, and
the conformity with the original documents of all documents
submitted to us as copies. We have further assumed that interest on
the Note is not excludable from gross income for federal income tax
purposes.
Based upon the foregoing and upon such investigation as we have
deemed necessary, we are of the opinion that:
1. The Agency is a redevelopment agency duly organized and
validly existing under the laws of the State of California
and has the power to own its properties and to carry on its
affairs as now being conducted.
2. There is no action, suit, investigation or proceeding
pending with service of process accomplished or, to the
best of our knowledge after due inquiry, threatened,
against or affecting the Agency before any court,
governmental agency or arbitrator which may adversely
affect the ability of the Agency to perform its obligations
under the Credit Agreement or the Note or which purports to
affect the legality, validity or enforceability of the
Credit Agreement or the Note.
3. The execution, delivery and performance by the Agency of
the Credit Agreement and the Note is within the Agency's
powers, have each been duly authorized by necessary
governmental action, and except as qualified below, will
not (a) contravene or violate any provision of the
ordinance pursuant to which the Agency was created or
Resolution No. 1 or any instrument or contractual
restriction binding on or affecting the Agency, or (b)
result in a breach of any instrument or contractual
obligation binding on or affecting the Agency.
The opinions set forth above are subject to the following
qualifications:
(a) With respect to No. 2 above, our due inquiry is based on a
search of the public records of the Superior Court of the
County of Orange and the United States District Court for
the Central District of California with an Orange County
Civil Index date through May 15, 1992, which Index date is
..i the most current Index date obtainable as of the date
hereof.
Morgan Guaranty Trust Company of New York
May 20, 1992
Page 3
(b) With respect to No. 3 above, we express no opinion herein
as to whether the execution, delivery and performance by
the Agency of the Credit Agreement and the Note will result
in a breach of that certain "DISPOSITION AND DEVELOPMENT
AGREEMENT By and Among THE REDEVELOPMENT AGENCY OF THE CITY
OF HUNTINGTON BEACH, ROBERT L. MAYER, as Trustee of the
Robert L. Mayer Trust of 1982, dated June 22, 1982, as
amended, and WATERFRONT CONSTRUCTION NO. 1, a California
limited partnership" or any of the amendments thereto.
(c) The enforceability of the Agency's obligations under the
Credit Agreement and Note are subject to the effect of
applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights
generally.
(d) The enforceability of the Agency's obligations under the
Credit Agreement and Note may be subject to general
principles of equity including without limitation, concepts
of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance and
injunctive relief, (regardless of whether such
enforceability is considered in a proceeding in equity or
at law).
(e) We are members of the State Bar of California and
accordingly do not purport to be experts on, or to be
qualified to express any opinion herein concerning, nor do
we express any opinions herein concerning any law other
than the federal laws of the United States of America and
the laws of the State of California, excluding however,
federal or state securities and banking law.
We call attention to the fact that the foregoing opinions may be
affected by actions taken or events occurring after the date
hereof. We have not undertaken to determine, and hereby expressly
disclaim any obligation to inform you, or any other person, whether
such actions or events are taken or occur, and with respect to Item
2 above, have been taken or occurred, after May 15, 1992.
This opinion is furnished to you pursuant to your request and is for
your benefit only and may not be relied upon by any other person or
delivered to any other person without our prior written consent.
Very truly yours,
GAIL HUTTON
City Attorne
THE REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
I, the undersigned, Connie Brockway, Clerk of the
Redevelopment Agency of the City of Huntington Beach, a
redevelopment agency created, established and authorized to
transact business and exercise its powers under the laws of the
State of California (the "Agency"), DO HEREBY CERTIFY that:
1. This Certificate is furnished pursuant to Section
4.01(f) of the Credit Agreement, dated as of May 1, 1992, by
and between the Agency and Morgan Guaranty Trust Company of New
York (such Credit Agreement, as in effect on the date of this
Certificate, being herein called the "Credit Agreement").
Unless otherwise defined herein capitalized terms used in this
Certificate shall have the meanings assigned to those terms in
the Credit Agreement.
2. Attached hereto as Exhibit A are true and correct
copies of the resolutions duly adopted by the Agency at
meetings on April 6, 1992 and April 20, 1992, authorizing the
execution, delivery and performance by the Agency of the Credit
Agreement and the Note, which resolutions have not been
revoked, modified, amended or rescinded and are still in full
force and effect.
3. Attached hereto as Exhibit B is a true and correct
copy of the resolution of the City of Huntington Beach
establishing -the Agency, together with all modifications and
amendments to such resolution through the date hereof.
4. Attached hereto as Exhibit C is a true and correct
copy of Resolution No. 1 of the Agency, dated March 1, 1976,
setting forth the law and authority under which the Agency
operates, together with all modifications and amendments
thereof through the date hereof and all documents referenced
therein.
5. Michael T. Uberuaga is the duly appointed Executive
Director of the Agency and has held such office since February
26, 1990. The signature set forth below is Michael T.
Uberuaga's genuine signature.
Name Office Signature
Michael T. Uberuaga Executive Directcd
6. On the date hereof, the representations and warranties
contained in Article V of the Credit Agreement are true and
correct.
.i
k4.� 7. On the date hereof, no Default or Event of Default has
occurred or is continuing or would result from the execution
and delivery by the Agency of the Credit Agreement or the Note
or the making of Loans or Money Market Advances thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand this
day of May, 1992.
THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
CONNIE BROCKWAY, ,..
Clerk of the Redevelopmen Agency
of the City of Huntington Beach
05/05/92
04670/2460/09 - 2 -
CITY OF HUNTINGTON BEACH
2000 MAIN STREET
ADMINISTRATIVE SERVICES
May 20, 1992
CALIFORNIA 92648
Morgan Guaranty Trust Company of New York
Credit Administration
60 Wall Street VIA FACSIMILE
New York, New York 10260-0060
Attention: Gerald M. Corso
Mr. Corso:
1� The undersigned, an authorized officer of The Redevelopment Agency of the City
of Huntington Beach (the "Agency"), refers to the Credit Agreement, dated as
of May 20, 1992 (as amended from time to time, the "Credit Agreement." the
terms defined therein being used herein as therein defined), between the
Agency and you, and hereby gives you notice, irrevocably, pursuant to
Section 2.03 of the City Agreement, that the Agency hereby requests a
Borrowing under the Credit Agreement, and in that connection sets forth below
the information relating to such Borrowing (the "Proposed Borrowing") as
required by Section 2.03 of the Credit Agreement:
1. the Business Day of the Proposed Borrowing is May 20, 1992;
2. the Proposed Borrowing is to consist of a Money Market Advance;
3. the principal amount of the proposed Borrowing is $4,300,000;
4. the duration of the Interest Period for the Proposed Borrowing is
from May 20. 1992 to June 3, 1992.
The undersigned hereby certifies on behalf of the Agency that the following
statements are true on the date hereof, and will be true on the date of the
Proposed Borrowing:
(A) the representations and warranties contained in Article V of the
Credit Agreement are correct, before and after giving effect to
the Proposed Borrowing and to the application of the proceeds
�J thereof, as though made on and as of such date; and
DRUG USE
is
AB
J00P'-
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
(B) no Default or Event of Default has occurred and is continuing. or
would result from such Proposed Eorrowing or from the application
of the proceeds thereof.
MTU:RJF:skd
WPADSERT:864
Sincerely,
w2—
THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
.' '45 cz A�
Michae T. Uberuaga
Executive Director
ME
CERTIFICATE OF THE REDEVELOPMENT AGENCY
OF THE CITY OF HUNTINGTON BEACH
REGARDING LIENS ON MAIN PIER
PROJECT AREA TAX REVENUES
Stradling, Yocca, Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
The undersigned, THE REDEVELOP:+SENT AGENCY OF THE CITY OF
HUNTINGTON BEACH (the "Agency") hereby states and certifies the
following (all the terms used herein without definition shall
have the meanings assigned to such terms in the "Credit
Agreement" between the Agency and Morgan Guaranty Trust Company
of New York ("Morgan"), dated Mayes , 1992):
With the exception of the loan made by the Huntington
Beach Public Financing Authority (the "Authority") to
the Agency from the proceeds of the sale of the
Agency's Huntington Beach Redevelopment Projects 1988
Revenue Bonds, Series A, pursuant to that certain loan
agreement, dated as of May 1, 1988, among the Agency,
First Interstate Bank of California, and the Authority
(the "Senior Loan"), Morgan's security interest in the
Available Tax Revenues is not subject to any lien with
a right of payment senior to the Agency's obligations
to Morgan under the Credit Agreement.
Dated: Mayy, 1992
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
By:
Michael-T. Uberuaga,
Executive Director
05/06/92
04790/2460/57 — I
THEWATERFRONT
May Zo , 1992
Gail Hutton, Esq.
City Attorney
CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach, California 92648
Thomas P. Clark, Jr., Esq.
STRADLING, YOCCA, CARLSON & RAUTH
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Re: Redevelopment Agency Credit Agreement and Note
with Morgan Guarantee Trust Company -of New York
Dear Sirs:
The current business operations of Robert L. Mayer (hereinafter the "Mayer Entities")
consist of Robert L. Mayer as Trustee of the Robert L. Mayer Trust of 1982, dated June 22,
1982, as amended; The Robert Mayer Corporation, a California corporation; The
Waterfront, Inc., a California corporation; and Waterfront Construction # 1, a California
limited partnership for which The Waterfront, Inc. is the sole general partner. For your
information, one or more of the Mayer Entities is party to the following lawsuits:
Waterfront Construction #1 v. J. A. Jones Construction Comnanv, et al. and related
cross -action, Orange County Superior Court Case No. 657682;
R & D Fire Protection Company, v. J. A. Jones Construction Company, et al.,
Orange County Superior Court Case No. 674606;
E. F. Brady Company, Inc. v. J. A. Jones Construction Company, et al., Orange
County Superior Court Case No. 647630;
SASCO Electric v. J. A. Jones Construction Company, et al., Orange County Superior
Court Case No. 654338;
The above matters are disputes arising in connection with the construction of The
Waterfront Hilton Hotel.
The Robert Mayer Corporation
660 Newport Center Drive, Suite 1050, P.O. Box 8680, Newport Beath, CA 92658-86W . Telephone (714) 759-SM
Kydd v. Jones, et al., Orange County Municipal Court Case No. 177700
Solvay v. Jones, et al., Orange County Municipal Court Case No. 177701
Sisker, et al. v. Jones, et al., Orange County Municipal Court Case Nos. 177702,3,4
Oualman v. Jones, et al., Orange County Municipal Court Case No. 177705
DeFrancesco v. Jones, et al., Orange County Municipal Court Case No. 177708
Coffman v. Jones, et al., Orange County Municipal Court Case No. 177709
Barngrover v Jones, t al., Orange County Municipal Court Case No. 177710
Wahrenhrock v.Jones, et al., Orange County Municipal Court Case No. 177711
Simm, et al. v. Jones, et al., Orange County Municipal Court Case Nos. 177716,17
Harm v. Jones, et al., Orange County Municipal Court Case Nos. 182378
The above matters relate to claims by a group of residents in the neighborhood that
they were injured by dust created during the construction of The Waterfront Hilton
Hotel. In January of 1992 the plaintiffs' counsel granted us an open extension of
time to respond to the complaints and we have tendered our defense to J. A. Jones
Construction Company. To the best of our knowledge Jones and their insurance
carrier are pursuing settlements with all the parties.
Ryder TruckRental Inc. v. The Robert b4ayer Corporation, et al., San Bernardino
County Superior Court Case No. RCV 062105
The above matter is a dispute arising from damage to a rental truck rented by the
Quality Inn Hotel in Las Vegas, Nevada which is owned by the Robert L Mayer
Trust.
To the best of our knowledge the above lawsuits do not adversely affect the ability of the
Redevelopment Agency of the City of Huntington Beach to perform its obligations under
its Credit Agreement and/or Note with Morgan Guarantee Trust Company of New York nor
do they affect the legality, validity or enforceability of said Credit Agreement or Note.
Additionally, there is no pending, or to the best of our knowledge after due inquiry,
threatened action, suit, investigation or proceeding against or affecting the Mayer Entities
before any court, governmental agency or arbitrator which may adversely affect the ability
of the Redevelopment Agency of the City of Huntington Beach to perform its obligations
under its Credit Agreement and/or Note with Morgan Guarantee Trust Company of New
York or which purports to affect the legality, validity or enforceability of said Credit
Agreement or Note.
Sincerely,
Robert L Mayeff
for the Mayer Entities
-2-
M
O
THE WATERFRONT
May Z4 1992
Gail Hutton, Esq.
City Attorney
CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach, California 92648
Thomas P. Clark, Jr., Esq.
STRADLING, YOCCA, CARLSON & RAUTH
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
CERTIFICATE OF RELEASE OF INTEREST IN CERTAIN TAX REVENUES
Dear Sirs:
I, the undersigned, Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982, dated
June 22,1982, as amended ("Mayer") and as Chairman of the Board of The Waterfront, Inc.,
a California corporation and general partner of Waterfront Construction #1, a California
limited partnership do hereby certify as follows:
a. The undersigned has all necessary trust and corporate authority to execute this
certificate on behalf of Mayer and Waterfront.
b. The Redevelopment Agency of the City of Huntington Beach (the "Agency")
and Mayer are parties to that certain Disposition and Development
Agreement dated August 15, 1988, as amended by the First Amendment to
Disposition and Development Agreement dated June 17, 1991, the Second
Amendment to Disposition and Development Agreement dated as of August
1, 1991, the Third Amendment to Disposition and Development Agreement
dated as of March 16, 1992 and the Fourth Amendment to Disposition and
Development Agreement dated as of April 20,1992 (collectively the "DDA").
All capitalized terms not defined herein shall have the meaning set forth in
the DDA.
The Robert Mayer Corporation
660 Newport Center Drive, Suite 1050, P.O. Box 8680, Newport Beach, CA 92658-8680 • Telephone (714) 759-8041
C. It is hereby acknowledged and certified that upon Agency's payments in
accordance with Paragraphs 3, 4 and Subparagraph (ii) of Paragraph 5 of the
Third Amendment, Mayer and Waterfront has released its interest in the Tax
Increment revenues which are payment obligations of the Agency to Mayer
and Waterfront, including interest thereon, under Paragraphs 4 and 5 of
Attachment No. 5 to the DDA with respect to Separate Development Parcel
No. 1 (The Waterfront Hilton).
d. It is hereby acknowledged and certified that upon Agency's payments in
accordance with Subparagraph (i) of Paragraph 5 of the Third Amendment,
Mayer and Waterfront has released its interest in the Transient Occupancy
Tax revenues which are payment obligations of the Agency to Mayer and
Waterfront, including interest thereon, under Paragraphs 4 and 5 of
Attachment No. 5 to the DDA with respect to Separate Development Parcel
No. 1 (The Waterfront Hilton).
e. It is hereby acknowledged and certified that Agency's payments in accordance
with Paragraphs 3, 4 and 5 of the Third Amendment shall be in lieu of and
shall constitute a full and final settlement, payment, and discharge of all of
Agency's payment obligations, including interest thereon, under Paragraphs 4
and 5 of Attachment No. 5 to the DDA with respect to Separate
Development Parcel No. 1 (The Waterfront Hilton), including without
limitation payment of the "Phase 1 Paragraph 5 Costs" referenced in
Paragraph 1 of the Second Amendment.
Sincerely,
Robert L Mayer, as Trustee of
the Robert L Mayer Trust of 1982,
dated June 22, 1982, as amended
-2-
Waterfront Construction #1
a California Limited Partnership
by The Waterfront, Inc.
a California corporation,
its sole general partner
ZA.r,o�f
Robert'L Mayer
Chairman of the Board
The Waterfront, Inc.
CERTIFICATE OF THE DAI-ICHI KANGYO BANK, LTD.,
APPROVING THE THIRD AMENDMENT TO
DISPOSITION AND DEVELOPMENT AGREEMENT
By and Among THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH,
ROBERT L. MAYER, as Trustee of the
Robert L. Mayer Trust of 1982,
dated June 22, 19B2, as amended, and
WATERFRONT CONSTRUCTION NO. 1,
a California limited partnership
The undersigned, The Dai-Ichi Kangyo Bank Ltd., Los
Angeles Agency (the "Bank"), hereby states and certifies the
following (all the terms used herein without definition shall
have the meanings assigned to such terms in the "Third
Amendment to Disposition and Development Agreement By and Among
The Redevelopment Agency of the City of Huntington Beach,
Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of
1982, dated June 22, 1982, as amended, and Waterfront
Construction No. 1, a California limited partnership," dated
March 16, 1992 (the "Third Amendment")):
(i) The Bank approves and consents to those terms
and conditions of the Third Amendment which pertain to the Bank
and, except as provided in the Third Amendment, releases any
right, title and interest that it might otherwise have in any
revenues payable by the Agency, including interest thereon,
with respect to Separate Development Parcel No. 1 under
Paragraph 5 of Attachment No. 5 of the Existing DDA which
constitute Property Tax Increment, Transient Occupancy Tax and
any other revenues lawfully available to the Agency and the
Bank has no pending claim against the Agency payable from such
revenues; and
(ii) Except as provided in the Third Amendment, the
Bank has no other claim of right, title or interest under the
Existing DDA; and
(iii) The Bank approves and accepts the payment by the
Agency to the Bank as set forth in Section 5 of the Third
Amendment as complete, full and final consideration and
satisfaction for the Bank's release of its security interest in
the revenues payable by the Agency under Paragraph 5 of
Attachment No. 5 of the Existing DDA, with respect to Separate
Development Parcel No. 1 (the Waterfront Hilton); and
MW
Mw
(iv) The Bank specifically certifies that it shall
extend the due date of the facility provided by it under the
Credit Agreement dated as of March 31, 1989, between Waterfront
Construction No. 1 and the Bank, as amended by the First
Amendment to Credit Agreement dated March 31, 1992, to
January 1, 1993.
Dated: May , 1992 THE DAI-ICHI KANGYO BANK, LTD.,
Los Angeles Agency
I is.Vice President & Asst. General Manager
05/06/92
0323Q/2460-57 - 2 -
""I R, STRADLINO
NICK t. 'OCCA
C. CRAIG CARLSON
WILLIAM R. RAUTN MI
K. C. /CNAAF
RIC-+AwD C. GOODMAN
JOHN J. MUOIPMY
TMOMA/ R CLARK, JR,
SEN A. FRYOMAN
DAVIO W. MtW[N
FAUL L. GAL[
RVDOLPH C. SHEPARD
RO/ERT J. KANE
M, D. TALSOT
■wVCE C. STUART
[. KURT YEAOER
RO/[RT J. WHALEN
w0/EwT [. RICH
TNOMAZ A. Pi/TONE
PA140ALL J, SHEwMAN
SRUCC W. FEUCHT[R
U11AR,I J. MUtSSCM
KARtN /IL CLLI/
CLIZASETH C. ORE[N
/wtCC D. MAY
DONALD J. HAMMAN
JOwH J. SWsOART. in.
MICHACL A. ZA/LOCIU
NCILA R. /ERNSTEIN
C[LESTE STAHL BRADY
CMRISTOPMER J. KILPATRICK
JOELK OUT"
JLLLIC M•COT AKINS
DAWN C. HOM[YWELL
OWEN /, LU/Ow
LAWR[HCE /. COHN
STRADLING, YOCCA, CARLSON & RAUTH
/YEPHEN N. LACOUNT A PROKESSIONAL CORPORATION
HARLEY L. SJELLAND ATTORNEYS AT LAW
ST[PHEM T. rRetuAN
wOS[RT A. WILSON 660 NEWPORT CENTER DRIVE, SUITE 1600
CHERYL A. COW
NICHOLA/ J. YOCCA POST OFFICE 6OK 7660
JULIC M. PORT[R
MAwK T. PAUN NEWPORT BEACH, CALIFORNIA 02600.6441
MICHAEL [. FLYNN
ROS[RT C. /UNSTCH
ALETA LOUISE /RYANT
RONALD A. VAN /LARCOM
STEPMEM M. AMNAMARA
DART A. PEMSCRTON
CAROL L. LE W
09IMI69 MAw/AUGN MERINO
/AR■4RA ZEID LC MOLD
JON t.00ET2
ALAN J. KESSCL
DARY R DOWN/
JOHN O. IRELAND
IAICM►CL J. PCNOCRpAST
DAVID M. MANN
CNRISTOPHER M.MOROROVL09
DANA M. KCZMOH
DARRYL S. DI/SON
JOHN 6. M-CL[NDON
TODD R. THAKAN
MCNARD T. NEEDHAM
RO/E MY C. WALLACE
CAMON C. MOSLEM
DE RARD L. OS IIAM
JOHN /. CANNON
JOHN E. WOODHCAD IV
DOUGLAS R rtICK
WILLIAM J. MORL[T
TELEPHONE (714) 725.4000
TELEPHONE (714) 640.7035
rAX NUN/ER
1714) 725-4100
May W , 1992
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
JOHN [. SRECK[NMOOE
RCN^ C. STON[
or COuNf[L
WRITER'S DIRECT DIAL:
(714) 725-4000
Re: Credit Agreement, dated as of May W, 1992. between
Morgan Guaranty Trust Company of New York and The
Redevelormeat.Agency'
ngton Beach_
Ladies and Gentlemen:
We have acted as special counsel to The Redevelopment
Agency of the City of Huntington Beach (the "Agency"). We are
familiar with the matters relating to the preparation,
execution and delivery of a Credit Agreement, dated as of
May Z4, 1992 (the "Credit Agreement"), between the Agency and
you (the "Hank"). Terms defined in the Credit Agreement are
used herein as therein defined.
We have examined the originals, or copies certified to our
satisfaction, of (i) the Agency's fully executed counterpart of
the Credit Agreement, including all Exhibits and Schedules
attached thereto; (ii) such other corporate records of the
Agency, certificates of public officials and of officers of the
Agency, (iii) the agreements, instruments and documents which
affect or purport to affect the obligations of the Agency under
the Credit Agreement, and (iv) such other agreements,
instruments and documents as we have deemed necessary as a
basis for the opinions hereinafter expressed.
we have assumed the due execution and delivery of the
Credit Agreement by the Bank. We have also assumed the
Morgan Guaranty Trust Company of New York
k..1 May : , 1992
Page 2
genuineness of all signatures and the authenticity of all
documents executed in connection with the transaction submitted
to us as originals, and the conformity with the original
documents of all documents submitted to us as copies. We have
further assumed that interest on the Note is not excludable
from gross income for federal income tax purposes.
Based upon the foregoing and upon such investigation as we
have deemed necessary, we are of the opinion that:
1. The execution, delivery and performance by the Agency
of the Credit Agreement and the Note is within the
Agency's powers, have each been duly authorized by
necessary governmental action, (i) do not contravene
or violate any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree,
determination or award presently in effect and having
applicability to the Agency, (ii) will not result in a
breach of the "DISPOSITION AND DEVELOPMENT AGREEMENT
By and Among THE REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH, ROBERT L. MAYER, as Trustee of the
Robert L. Mayer Trust of 1982, dated June 22, 1982, as
amended, and WATERFRONT CONSTRUCTION NO. 1, a
California limited partnership" or any of the
amendments thereto, and (iii) to the best of our
knowledge, will not result in, or require, the
creation or imposition of any lien upon or with
respect to any other properties now owned or hereafter
acquired by the Agency.
2. No further authorization, consent or approval or other
action by, and no further notice to or filing or
registration with, any governmental authority,
regulatory body or court is required for the due
execution, delivery and performance by the Agency of
the Credit Agreement and the Note.
3. Each of the Credit Agreement and the Note has been
duly executed and delivered by the Agency and is the
legal, valid and binding obligation of the Agency
enforceable against the Agency in accordance with its
terms (except with respect to any indemnification
provisions, as to which we express no opinion).
Morgan Guaranty Trust Company of New York
May 20 , 1992
Page 3
4. The Agency is authorized to pledge, and pursuant to the
Credit Agreement has validly pledged, to the Bank the
Available Tax Revenues as security for the payment and
performance of the Agency's obligations to the Bank
under the Credit Agreement. Such pledge is a valid and
binding obligation of the Agency enforceable against
the Agency and its successors and assigns. The Bank's
security interest in the Available Tax Revenues is not
subject to any lien with a right of payment senior to
the Agency's obligations to the Bank under the Credit
Agreement with the exception of the Senior Loan.
5. The Agency does not enjoy any rights of immunity from
being sued for any default of its obligations under the
Credit Agreement, as California Health and Safety Code
Section 33125 expressly provides that a redevelopment
agency may be sued.
The opinions set forth above are subject to the following
qualifications:
(a) The enforceability of the Agency's obligations under
the Credit Agreement and Note are subject to the effect
of applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights
generally.
(b) The enforceability of the Agency's obligations or the
termination of the Agency's rights under the Credit
Agreement and Note may be subject to general principles
of equity including without limitation, concepts of
materiality, reasonableness, good faith and fair
dealing and the possible unavailablity of specific
performance and injunctive relief, (regardless of
whether such enforceability is considered in a
proceeding in equity or at law) and by the exercise of
judicial discretion in appropriate cases.
(c) We are members of the State Bar of California and
accordingly do not purport to be experts on, or to be
qualified to express any opinion herein concerning, nor
do we express any opinions herein concerning any law
other than the federal laws of the United States of
America and the laws of the State of California,
excluding however, federal or state securities and
banking law.
ti..J
Morgan Guaranty Trust Company of New York
May 10 , 1992
Page 4
(d) The opinion set forth in the last sentence of
paragraph No. 4 has been rendered solely in reliance
on a certificate of the Agency stating that except for
one Senior Loan, the Available Tax Revenues are not
subject to any loan with a right of payment senior to
the Agency's obligations to the Bank under the Credit
Agreement.
We call attention to the fact that the foregoing opinions
may be affected by actions taken or events occurring after the
date hereof. We have not undertaken to determine, and herby
expressly disclaim any obligation to inform you, or any other
person, whether such actions or events are taken or occur.
This opinion is furnished to you pursuant to your request
and is for your benefit only and may not be relied upon by any
other person or delivered to any other person without our prior
written consent.
Very truly yours,
.J"/ t4,;;C� a*�� -/- 4UD��
STRADLING, YOCCA, CARLSON & RAUTH
03020/2460-57
DECLARATION OF JOE GOLDBAUM
ON PUBLIC RECORD SEARCH
I, JOE GOLDBAUM, declare and state under penalty of perjury
that the matters stated in this affidavit are true and correct
and that if sworn as a witness, I can testify competently to the
following facts:
1. I am an adult residing in the County of Orange, State of
California.
2. I am a licensed private investigator, exempt from
registration'urder California Business & Professions Code Section.
22350 (b), doing business as J G I, An Investigative Information
Agency, at 20101 S.W. Birch Street, Suite 150, Santa Ana Heights,
California 92707, and pry phone number is (714) 724-9396.
8. On May 12, 1992, I received instructions from Law
Office of Stradling, Yocca, Carlson & Rauth to check the Orange
County Superior Court Civil Index from April 10, 1992 thru May
15, 1992 on Robert Mayer Corporation, Robert Mayer Trust,
Waterfront, Redevelopment Agency of Huntington Beach and City of
Huntington Reach Redevelopment; No record was found on the above
names.
4. On May 12, 1992, I received instructions from Law
Office of Stradling, Yocca, Carlson & F.auth to check the Central
District Court Index from, April 10, 1992 thru May 15, 1992 on
Robert Mayer Corporation, Robert Mayer Trust, Waterfront,
Redevelopment Agency of Huntington Beach and City of Huntington
Beach Redevelopment; No record was found on the above names.
Executed this 19th day of May, 1992, at Santa Ana Heights,
California.
I declare under penalty of Perjury;;III
the foregoing is
true and correct.
r
�.J
JUXi GL' ,7%AUM
CITY OF HUNTINGTON BEACH
2000 MAIN STREET
ADMINISTRATIVE SERVICES
May 20, 1992
Morgan Guaranty Trust Company of New York
Credit Administration
60 Wall Street
New York, New York 10260-0060
Attention: Gerald M. Corso
Mr. Corso:
CALIFORNIA 92648
VIA FACSIMILE
The undersigned, an authorized officer of The Redevelopment Agency of the City
of Huntington Beach (the "Agency"), refers to the Credit Agreement, dated as
of May 20, 1992 (as amended from time to time, the "Credit Agreement," the
terms defined therein being used herein as therein defined). between the
Agency and you, and hereby gives you notice, irrevocably, pursuant to
Section 2.03 of the City Agreement, that the Agency hereby requests a
Borrowing under the Credit Agreement, and in that connection sets forth below
the information relating to such Borrowing (the "Proposed Borrowing") as
required by Section 2.03 of the Credit Agreement:
1. the Business Day of the Proposed Borrowing is May 20, 1992;
2. the Proposed Borrowing is to consist of a Money Market Advance;
3. the principal amount of the Proposed Borrowing is $4,300,000;
4. the duration of the Interest Period for the Proposed Borrowing is
from May 20, 1992 to June 3, 1992.
The undersigned hereby certifies on behalf of the Agency that the following
statements are true on the date hereof, and will be true on the date of the
Proposed Borrowing:
(A) the representations and warranties contained in Article V of the
Credit Agreement are correct, before and after giving effect to
the Proposed Borrowing and to the application of the proceeds
thereof, as though made on and as of such date; and
DRUG USE
Is
A8
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
(B) no Default or Event of Default has occurred and is continuing, or
mould result from such Proposed Borrowing or from the application
of the proceeds thereof.
Sincerely.
THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
By.
Michae T. Uberuaga
Executive Director
MTU:RJF:skd
_2_
WPADSERT:854
THE REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
I, the undersigned, Connie Brockway, Clerk of the
Redevelopment Agency of the City of Huntington Beach, a
redevelopment agency created, established and authorized to
transact business and exercise its powers under the laws of the
State of California (the "Agency"), DO HEREBY CERTIFY that:
1. This Certificate is furnished pursuant to Section
4.01(f) of the Credit Agreement, dated as of May,lo , 1992, by
and between the Agency and Morgan Guaranty Trust Company of New
York (such Credit Agreement, as in effect on the date of this
Certificate, being herein called the "Credit Agreement").
Unless otherwise defined herein capitalized terms used in this
Certificate shall have the meanings assigned to those terms in
the Credit Agreement.
2. Attached hereto as Exhibit A are true and correct
copies of the resolutions duly adopted by the Agency at
meetings on April 6, 1992 and April 20, 1992, authorizing the
execution, delivery and performance by the Agency of the Credit
Agreement and the Note, which resolutions have not been
revoked, modified, amended or rescinded and are still in full
force and effect.
3. Attached hereto as Exhibit B is a true and correct
copy of the resolution of the City of Huntington Beach
establishing -the Agency, together with all modifications and
amendments to such resolution through the date hereof.
4. Attached hereto as Exhibit C is a true and correct
copy of Resolution No. 1 of the Agency, dated March 1, 1976,
setting forth the law and authority under which the Agency
operates, together with all modifications and amendments
thereof through the date hereof and all documents referenced
therein.
5. Michael T. Uberuaga is the duly appointed Executive
Director of the Agency and has held such office since February
26, 1990. The signature set forth below is Michael T.
Uberuaga's genuine signature.
Name office Sionature
Michael T. Uberuaga Executive Directo
6. On the date hereofj, the representations and warranties
contained in Article V of the Credit Agreement are true and
correct.
a
7. On the date hereof, no Default or Event of Default has
occurred or is continuing or would result from the execution
and delivery by the Agency of the Credit Agreement or the Note
or the making of Loans or Money Market Advances thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand thisc2Z-
day of May, 1992.
THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
Ala
�
CONNIE BROCKWAY,
Clerk of the Redevelopment Agency
of the City of Huntington Beach
05/05/92
04670/2460/09 - 2 -
CITY CLERK'S
Copy NOTE
U.S. $4,350,000 Mayoxa� 1992
Huntington Beach, California
FOR VALUE RECEIVED, THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH, a redevelopment agency created,
established and authorized to transact business and exercise
Its powers under the laws of California (the "Agency"),
hereby unconditionally promises to pay from Available Tax
Revenues to the order of MORGAN GUARANTY TRUST COMPANY OF NEW
YORK (the "Bank") at its Domestic Lending Office, the unpaid
principal amount of each Loan and Money Market Advance made
by the Bank to the Agency pursuant to the Credit Agreement
referred to below on the last day of the Interest Period
relating to such Loan. The Agency promises to pay from
Available Tax Revenues interest on the unpaid principal
amount of each such Loan and Money Market Advance on the
dates and at the rate or rates provided for in the Credit
Agreement.
All such payments of principal and interest shall
be made in lawful money of the United States of America in
Federal or other immediately available funds at the office of
the Bank located at 60 Wall Street, New York, New York 10260-
0060.
All Loans and Money Market Advances made by the
Bank, the maturities thereof and all repayments of the
principal thereof shall be recorded by the Bank and, prior to
any assignment hereof, appropriate notations to evidence the
foregoing information with respect to each such Loan and
Money Market Advance then outstanding shall be endorsed by
the Bank on the schedule attached hereto and made a part
hereof; provided that the failure of the Bank to make any
such recordation or: endorsement shall not affect the
obligations of the Agency hereunder or under the Credit
Agreement.
This Note is the Note referred to in the Credit
Agreement dated as of Maya, 1992, by and between the Agency
and the Bank (as the same may be amended from time to time,
the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings. Reference
is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity
hereof.
1
THE PAYMENT OBLIGATIONS OF THE AGENCY UNDER THE
CREDIT AGREEMENT AS EVIDENCED BY THIS NOTE ARE NOT A DEBT OF
THE CITY OF HUNTINGTON BEACH, THE COUNTY OF ORANGE, THE STATE
OF CALIFORNIA, OR ANY OF ITS POLITICAL SUBDIVISIONS AND
NEITHER THE CITY OF HUNTINGTON BEACH, THE COUNTY OF ORANGE,
THE STATE OF CALIFORNIA, NOR ANY OF ITS POLITICAL
SUBDIVISIONS IS LIABLE ON THEM, NOR IN ANY EVENT SHALL THE
PAYMENT OBLIGATIONS OF THE AGENCY UNDER THE CREDIT AGREEMENT
BE PAYABLE OUT OF ANY FUZiDS AND PROPERTIES OTHER THAN THOSE
OF THE AGENCY.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF CALIFORNIA.
THE REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
Title:.
',!'5-yer -'/iv e 7,>,/'e,*'
NOTE SCHEDULE
Date of Loan
or Advance
Amount of Loan
or Advance
Type of Loan
Date and Amount
of Interest Paid
Date*and Amount
of Principal. Paid
E
V
CREDIT AGREEMENT
between the
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
and
ITORGAN GUARANTY TRUST COMPANY
OF NEW YORK
Dated as of May 40, 1992
kl�
FABLE OF CONTENTS
a e
ARTICLE I
DEFINED TERMS; INTERPRETATION
Section 1.01. Definitions . . . . . . . . . . . . 1
Section 1.02. Interpretation . . . . . . . . . . 7
ARTICLE II
THE FACILITIES
Section
2.01.
Loan Facility . . . . . . . . .
7
Section
2.02.
Notice of Borrowing; Disbursement
of Funds . . . . . . . . . . . . .
7
Section
2.03.
Money Market Advance Facility . . .
8
Section
2.04.
Refunding Loans . . . . . . . . . .
9
Section
2.05.
Promissory Note . . . . . . . . . .
10
Section
2.06.
Security for Payments; Further
Assurance . . . . . . . . . . . . .
10
Section
2.07.
Interest; Interest Periods . . . .
10
Section
2.08.
Termination or Reduction of
Commitment . . . . . . . . . . . .
11
Section
2.09.
Optional Prepayments . . . . . . .
11
Section
2.10.
Mandatory Prepayment . . . . . . .
12
Section
2.11.
General Provisions as to Payments .
13
Section
2.12.
Conputation of Interest and Fees
13
Section
2.13.
Funding Losses . . . . . . . . . .
13
ARTICLE III
CHANGES IN CIRCUMSTANCES AFFECTING THE LOANS
Section 3.01. Increased Cost of Maintaining the
Commitment and Reduced Return . . . 14
Section 3.02. Basis for Determining Interest Rate
Unavailable . . . . . . . . . . . . 16
Section 3.03. Illegality . . . . . . . . . . . . 16
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Effectiveness . . . . . . . . . . . 16
Section 4.02. Loans and Money Market Advances . . 18
ARTICLE V
REPRESENTATIONS A14D WARRANTIES
Section 5.01. Due Creation . . . . . . . . . . . 18
Section 5.02. Due Authorization; No Violation; No
Default . . . . . . . . . . . . . . 19
Section 5.03. Approvals . . . . . . . . . . . . . 19
1
W
ME
u
P, Age
Section
5.04.
Enforceability . . . . . . . . . .
19
Section
5.05.
Litigation . . . . . . . . . . . .
19
Section
5.06.
Disclosure . . . . . . . . . . . .
20
Section
5.07.
No Sovereign Immunity . . . . . . .
20
Section
5.08.
Pledged Revenues . . . . . . . . .
20
Section
5.09.
No ERISA Plans . . . . . . . . . .
20
Section
5.10.
Environmental Matters . . . . . . .
20
ARTICLE VI
COVENANTS
Section
6.01.
Compliance with Laws . . . . . . .
21
Section
6.02.
Agency to Maintain Existence . . .
21
Section
6.03.
Notice of Default . . . . . . . . .
21
Section
6.04.
Further Assurances . . . . . . . .
21
Section
6.05.
Books and Records; Financial
Statements . . . . . . . . . . . .
22
Section
6.06.
Inspection . . . . . . . . . . . .
22
Section
6.07.
No ERISA Plans . .
22
Section
6.08.
Limitation on Indebtedness
22
Section
6.09.
Use of Proceeds . . .
23
Section
6.10.
Payment of Loans and Money Market
Advances . . . . . . . . . . . . .
23
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
Section 7.01. Events of Default; Remedies . . . . 23
Section 7.02. Exercise of Rights . . . . . . . . 25
ARTICLE VIII
MISCELLANEOUS
Section
8.01.
Notices . . . . . . . . . . . . . .
25
Section
8.02.
Amendment and Waivers . . . . . . .
26
Section
8.03.
Successors and Assigns . . . . . .
26
Section
8.04.
Expenses; Documentary Taxes;
Indemnification •. . . . . . . .
27
Section
8.05.
Headings; Table of Contents . . . .
28
Section
8.06.
Severability of Provisions . . . .
28
Section
8.07.
Counterparts; Integration . . . . .
28
Section
8.08.
Governing Law and Jurisdiction . .
29
Section
8.09.
Waiver of Jury Trial . . . . . . .
29
Section
8.10.
No Third Party Beneficiaries . . .
29
9
SCHEDULES
SCHEDULE 1 - Estimation of Tax Revenue Surplus
For Fiscal Year 1991-92
SCHEDULE 2 - Projection of Tax Increment Revenues For Fiscal
Years 1991-92, 1992-93, 1993-94, 1994-95 and
1995-96
EXHIBITS
EXHIBIT
A -
Form
of Note
EXHIBIT
B -
Form
of Notice of Borrowing
EXHIBIT
C -
Form
Opinion of Counsel to the Agency
EXHIBIT
D -
Form
of Secretary's Certificate
iii
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of May Z.O, 1992
(together with all amendments, modifications and supplements,
this "Agreement"), is entered into by and between the
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a
redevelopment agency created, established and authorized to
transact business and exercise its powers, all under and
pursuant to the Community Redevelopment Law (Part 1 of
Division 24 of the Health and Safety Code of the state of
California) (the "Agency"), and IIORGA14 GUARANTY TRUST COMPANY
OF NEW YORK, a New York banking corporation (the "Bank").
W I T W 1 S S E T H:
WHEREAS, the Agency has requested the Bank to make
available to the Agency a short-term loan facility;
WHEREAS, the Agency has determined that any interest
payable by the Agency to the Bank pursuant to the short-term
loan facility shall be subject to Federal income taxation;
WHEREAS, the Agency intends to repay any loans made
hereunder at the time at which it next issues bonds, notes or
other evidences of indebtedness; and
WHEREAS, subject to and upon the terms and
conditions herein set forth, the Bank is willing to make
available the credit facility provided for herein;
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
DEFINED TERMS; INTERPRETATION
Section 1.01. Definitions. As used in this
Agreement, the following terms shall have the respective
meanings set forth below:
"Adjusted London Interbank offered Rate" means, with
respect to any Interest Period, a rate per annum equal to the
quotient obtained (rounded upwards, if necessary, to the next
higher 1/100 of 1%) by dividing (a) the applicable London
Interbank offered Rate by (b) 1.00 minus the Euro-Dollar
Reserve Percentage, if any.
"Actencyll has the meaning set forth in the
introductory paragraph of this Agreement.
"Agreement" has the meaning set forth in the
introductory paragraph of this Agreement.
"Assignee" has the r.:eaning set forth in Section
8.03(b) of this Agreement.
"Available Tax Revenues" means the Tax Revenues less
the amount of Tax Revenues required to pay interest and
principal on and reserve account requirements relating to the
Senior Loan.
" an " has the meaning set forth in the introductory
paragraph of this Agreement.
"Bankruptcy Code" has the meaning set forth in
Section 7.01(e).
"Ease Rate" means, for any day, a rate per annum
equal to the higher of (a) the Prime Rate for such day and (b)
the sum of 1/2 of 1% plus the Federal Funds Rate for such day.
"Base Rate Loan" means a Loan designated as such in
a Notice of Borrowing delivered by the Agency to the Bank and
any Loan that bears interest at the Base Rate.
"Borrowing" means the borrowing of a Loan or Loans
on a given date and the borrowing of a Money Market Advance or
Money Market Advances on a given date.
"Breakage Costs" means any loss, expense or
liability incurred by the Bank in connection with obtaining,
liquidating or employing deposits from third parties as a
result of the Agency's failure to borrow Euro-Dollar Loans or
Money Market Advances after notice has been given to the Bank
in accordance with Section 2.02(a) or Section 2.03(d) or as a
result of the prepayment or paynent of Euro-Dollar Loans or
Money Market Advances on a day other than the last day of an
Interest Period. Such loss, expense or liability shall
include, without limitation, an amount equal to the excess, if
any, as reasonably determined by the Bank, of (i) its cost of
obtaining the funds for the Euro-Dollar Loans or Money Market
Advances being paid, prepaid or not borrowed for the period
from the date of such payment, prepayment or failure to borrow
to the last day of the Interest Period for such Euro-Dollar
Loans or Money Market Advances (or, in the case of a failure
to borrow, the Interest Period for such Euro-Dollar Loans or
Money Market Advances which would have commenced on the date
of such failure to borrow) over (ii) the amount of interest
(as reasonably determined by the Bank) that would be realized
by the Bank in reemploying the funds so paid, prepaid or not
borrowed for such period or Interest Period, as the case may
be.
"DUsiness.pay" means a day which is not a Saturday,
Sunday or legal holiday on which banking institutions in the
2
State of California or the City of New York are authorized to
remain closed.
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute thereto.
"Commitment" means the obligation of the Bank to
lend the amount set forth in Section 2.01 hereof, as such
amount may be reduced from time to time pursuant to Section
2.08.
" efault" means any condition or event which, with
the giving of notice or lapse of time or both would, unless
cured or waived, become an Event of Default.
"pollars" and the sign "I" means lawful money of the
United States of America.
"Domestic Lendin❑ Office" means the principal office
of the Bank located at 60 Wall Street, New York, New York
10260, or such other branch (or affiliate) as the Bank may
hereafter designate as its Domestic Lending Office.
"Effective Date" means the date on which this
Agreement becomes effective pursuant to Section 4.01.
"Environmental Laws" means any and all Federal,
state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to
emissions, discharges or releases of pollutants, contaminants,
petroleum or petroleum products, chemicals or industrial,
toxic or hazardous substances or wastes into the environment,
including, without limitation, ambient air, surface water,
ground water, or land or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or other handling of pollutants,
contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Secu-
rity Act of 1974, as amended, and any successor statute
thereto.
"Euro-Dollar Business Day" means any Business Day on
which commercial banks are open for international business
(including dealings in Dollar deposits) in London.
"Evro-Dollar ending office" means the office of the
Bank located at Nassau, Bahamas or such other branch (or
�3
MA
affiliate) of the Bank as the Bank may hereafter designate as
its Euro-Dollar Lending Office.
" uro- of ar Loan" means a Loan designated as such
in a Notice of Borrowing delivered by the Agency to the Bank.
"Euro-Dollar Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the
maximum reserve requirements for a member of the Federal
Reserve System in New York City with deposits exceeding five
billion Dollars in respect of "Eurocurrency liabilities" (or
in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Euro-
Dollar Loans is determined or any category of extensions of
credit or other assets which includes loans by a non --United
States office of the Bank to United States residents). The
Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any changes
in the Euro-Dollar Reserve Percentage.
"Event of Default" has the meaning set forth in
Section 7.01.
" xniry Date" means September 30, 1992.
"Federal Funds Rate" means, for any day, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day; provided that (a) if
such day is not a Business Day, the Federal Funds Rate for
such day shall be the rate on such transactions on the next
preceding Business Day as so published on the next succeeding
Business Day, and (b) if no rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to the Bank on such day on
such transactions as determined by the Bank.
$%Interest Period" means with respect to each (a)
Euro-Dollar Loan, at the option of the Agency, the period
commencing on the date of such Loan and ending 1, 2, 3, 4 or
5 months thereafter, (b) Money Market Advance, at the option
of the Agency, the period commencing on the date of such Loan
and ending no sooner than 7 days thereafter and no longer than
268 days thereafter and (c) Base Rate Loan, the period
commencing on the date of such Loan and ending 30 days
thereafter or, if the Expiry Date is less than 30 days after
the incurrence of such Base Rate Loan, on the Expiry Date;
4
`J provided that: (i) in the case of Euro-Dollar Loans, any
Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Euro-
.Dollar Business Day, (ii) in the case of Euro-Dollar Loans,
any Interest Period which begins on the last Euro-Dollar
Business Day of the calendar month (or on a day for which
there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the
last Euro-Dollar Business Day of a calendar month, (iii) in
the case of Money Market Advances, any Interest Period which
would otherwise end on a day which is not a Business Day shall
be extended to the next succeeding Business Day and (iv) no
Interest Period shall extend beyond the Expiry Date.
"Law" means Division 24 of the California Health and
Safety Code and Article 11 of Chapter 3 of Division 2 of
Title 5 of the California Government Code.
"Loan" has the meaning set forth in Section 2.01.
"London Interbank Offered Rate" means, with respect
to any Interest Period, the rate per annum at which deposits
in Dollars are offered to the Bank in the London interbank
�J market at approximately 11:00 a.m. (London time) two Euro-
Dollar Business Days prior to the first day of such Interest
Period in an amount approximately equal to the principal
amount of the Euro-Dollar Loan to which such Interest Period
is to apply and for a period of time comparable to such
Interest Period.
"Money Market Advance" has the meaning set forth in
Section 2.03(a).
"Note" has the meaning set forth in Section 2.05.
"Hotice_of_Dorrowin4" has the meaning set forth in
Section 2.02(a).
"Parent" means, with respect to the Bank, any person
controlling the Bank.
i
"Participant" has the meaning set forth in Section
8.03(b).
"Prime Rate" means the rate of interest publicly
announced by the Bank in New York City from time to time as
its "prime rate," any change in the interest rate resulting
from a change in the Prime Rate to be effective on the date of
each change in the prime rate announced by the Bank. The
k,.J
5
Prime Rate is a reference rate only, and the Bank may make
loans from time to time at interest rates above, equal to or
below the Prime Rate.
"Project_" means the undertaking of the Agency
pursuant to the Redevelopment Plans and the Law for the
redevelopment of the Project Area.
"Project Area" means the Main Pier Project Area
described in the Redevelopment Plans.
"Redevelopment lans" means the Main Pier
Redevelopment Plan approved and adopted by Ordinance No. 2578,
adopted by the City Council of the City of Huntington Beach on
September 20, 1982, as amended pursuant to Ordinance No. 2634,
adopted September 6, 1983, together with any other amendments
thereof heretofore or hereafter duly authorized pursuant to
the Law.
"Refunding Loan" means a Loan or Money Market
Advance which, after application of the proceeds thereof,
results in no net increase in the outstanding principal amount
of Loans and Money Market Advances made by the Bank.
"Senior Loan" means the loan made by the Huntington
Beach Public Financing Authority (the "Authority") to the
�J Agency from the proceeds of the sale of the Agency's
Huntington Beach Redevelopment Projects 1988 Revenue Bonds,
Series A, pursuant to that certain Loan Agreement, dated as of
May 1, 1988, among the Agency, First Interstate Bank of
California and the Authority.
"Tax Revenues" means (a) that portion of taxes from
the Project Area received by the Agency, which is allocated to
and paid into a special fund of the Agency pursuant to Article
6 of Chapter 6 of Division 24 of the California Health and
Safety Code and Section 16 of Article XVI of the Constitution
of the State of California and (b) reimbursements,
subventions, including payments to the Agency with respect to
personal property within the Project pursuant to Section 16110
et seq. of the California Government Code, or other payments
made by the State of California with respect to any property
taxes that would otherwise be due on real or personal property
but for an exemption of such from such taxes. Tax Revenues
shall not include (a) taxes allocated to the Agency that are
required by Section 33334.2 of the Law to be used by the
Agency for increasing and improving the supply of low and
moderate income housing except to the extent such amounts are
permitted under the Law to be applied to pay debt service on
the Loans and Money Market Advances and (b) amounts payable by
the Agency under agreements entered into pursuant to Sections
33401 and 33445 of the California Health and Safety Code.
�.J
6
Section 1.02. Interpretation. In this Agreement,
the singular includes the plural and the plural the singular;
words importing any gender include the other genders;
references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the
statute referred to; references to agreements and other
contractual instruments shall be deemed to include all
subsequent amendments and other modifications to such in-
struments, but only to the extent such amendments and other
modifications are not prohibited by the terms of this Agree-
ment; and references to persons includes their respective
permitted successors and assigns; references to "Articles",
"Exhibits", "Sections", and other subdivisions are to the
designated Articles, Exhibits, Sections, and other
subdivisions of this Agreement; and references to the words
"hereof", "herein", "hereunder" and "herewith" refer to this
Agreement as a whole and not to any particular Article,
Section, or other subdivision.
ARTICLE II
THE FACILITIES
Section 2.01. oan Facilit . Subject to and upon
the terms and conditions set forth in this Agreement, the Bank
agrees to make loans (individually, a "Loan" and collectively,
the "Loans") to the Agency fron time to time prior to the
Expiry Date in amounts (less the principal amount of any Money
Market Advances made by the Bank pursuant to Section 2.03) not
exceeding in the aggregate at any one time outstanding
$4,350,000 (the "Commitment"). Each Loan under this Section
2.01 shall be in the minimum principal amount of $500,000 or
$100,000 nultiples in excess thereof and shall bear interest
as provided in Section 2.07. The Agency may prepay Loans as
provided in Section 2.09 and shall prepay the Loans as
provided in Section 2.10. Except as provided in Section 2.04,
Loans once prepaid or repaid may not be reborrowed. All Loans
shall mature and be payable in full on the last day of the
Interest Period applicable thereto. The unutilized portion of
the Commitment available to make Loans shall be reduced by the
principal amount of all Loans (other than Refunding Loans) and
Money Market Advances made by the Bank.
Section 2.02. Notice of Borrowing; ]2i sbursement of
Funds.
(a) whenever the Agency desires to make a Borrowing
of Loans hereunder it shall give the Bank written notice
substantially in the form attached hereto as Exhibit B (each
such notice, a "Notice of Borrowing"), not later than 11:00
a.m. (New York City tine) on (i) the date of each Base Rate
Loan and (ii) the third Euro-Dollar Business Day before each
7
Euro-Dollar Loan, specifying: (A) the date of such Loan,
which shall be a Business Day in the case of a Base Rate Loan
and a Euro-Dollar Business Day in the case of a Euro-Dollar
Loan, .(B) whether such Loan is to be a Base Rate Loan or a
Euro-Dollar Loan, (C) the principal amount of such Loan, (D)
in the case of a Euro-Dollar Loan, the duration of the
Interest Period applicable thereto (subject to the definition
of Interest Period), (E) whether such Loan is a Refunding
Loan, and (F) in the case of a Refunding Loan, the identity of
the Loan or Money Market Advance that is being repaid.
(b) Unless a Loan is a Refunding Loan, no later than
2:00 p.m. (New York City time) on the date specified in each
Notice of Borrowing, the Bank will make the proceeds thereof
available in Dollars in immediately available funds at the
Banks Donestic Lending Office. In the case of a Refunding
Loan, the proceeds thereof shall be applied to repay the Loan
or Money Market Advance identified by the Agency as the Loan
or Money Market Advance being repaid in the Notice of
Borrowing with respect to such Refunding Loan.
Section 2.03. Monev Market Advance Facilit
(a) In addition to the commitment of the Bank to
make Loans pursuant to Section 2.01, the Agency may, as set
forth in this Section, request the Bank to make offers to make
money market loans (such loans, "Money Market Advances") to
the Agency. The Bank may, but shall have no obligation to,
make such offers and the Agency may, but shall have no
obligation to, accept such offers in the manner set forth in
this Section.
(b) Whenever the Agency wishes to request offers
from the Bank to make Money Market Advances under this
Section, it shall transmit to the Bank by telephone (promptly
confirmed in writing) to Credit Administration, attention
Gerald M. Corso (telephone number (212) 648--6812)) a request
so as to be received no later than 11:00 a.m. (New York City
time) on the proposed date of Borrowing. Such request shall
specify: (i) the proposed date of Borrowing, which shall be a
Business Day, (ii) the principal amount of such Borrowing,
which shall not exceed the unutilized portion of the
Commitment then available, (iii) the duration of the Interest
Period desired which shall not extend beyond the Expiry Date.
The Agency may request offers to make Money Market Advances
for more than one Interest Period.
(c) Upon receipt of telephonic notice from the
Agency pursuant to the preceding paragraph, the Bank may
submit to the Agency by telephone (promptly confirmed in
writing) an offer or offers to make Money Market Advances.
Each such response by the Bank shall specify: (i) the proposed
�J date of Borrowing, (ii) the principal amount of the Money
Market Advance for which such offer is being made, which
principal amount may not exceed the principal amount of Money
Market Advances for which offers were requested (but which may
be less), and (iii) the rate of interest per annum (rounded to
the nearest 1/100th of 1$ and based on actual number of days
elapsed over a year of 360-days) offered for each such Money
Market Advance. Subject to Article III, each offer to make
Money Market Advances shall be irrevocable.
(d) If the Agency has received an offer to make a
Money Market Advance from the Bank, not later than 12:00 noon
(New York City time) on the date on which such offer is made,
the Agency shall notify the Bank by telephone (promptly
confirmed in writing) to Credit Administration, attention
Gerald M. Corso (telephone number (212) 648-6812)) of its
acceptance or non -acceptance of such offer. If the Agency
fails to respond to the Bank by such time on such date, the
Agency shall be deemed to have rejected such offer. In the
case of acceptance, such notice shall specify whether such
Money Market Advance is a Refunding Loan and, if so, the
identity of the Loan or Money Market Advance that is being
repaid.
(e) Unless a Money Market Advance is a Refunding
Loan, no later than 2:00 p.m. (flew York City time) on the
�J proposed date of Borrowing, the Bank will make the principal
amount of such Money Market Advance available in Dollars in
available funds at the Bank's Domestic Lending Office. In the
case of a Refunding Loan, the proceeds thereof shall be
applied to repay the Loan identified by the Agency as the Loan
being repaid.
(f) Except as provided in Section 2.04, Money Market
Advances once repaid may not be reborrowed. Each Money Market
Advance shall mature and be payable on the last day of the
Interest Period related thereto.
Section 2.04.]Refunding Loans. The Agency may
elect to repay a maturing Loan or maturing Money Market
Advance by incurring a Refunding Loan on the last day of the
Interest Period with respect to such maturing Loan or maturing
Money Market Advance. The Agency shall comply with the
provisions of Section 2.02 if it desires to incur a Refunding
Loan that is a Euro-Dollar Rate Loan or a Base Rate Loan.
The Agency shall comply with the provisions of Section 2.03 if
it desires to incur a Refunding Loan that is a Money Market
Rate Loan. The aggregate principal amount of a Refunding Loan
shall not exceed the aggregate principal amount of the Loans
or Money Market Advances that are being repaid with the
proceeds of such Refunding Loan.
Pi
Section 2.05. Promissory Note. The Agency's
�•� obligations to pay the principal of, and interest on, all
Loans and Money Market Advances made hereunder shall be
evidenced by a promissory note duly executed and delivered by
the Agency in substantially the form set forth herein as
Exhibit A with blanks appropriately completed in conformity
therewith (the "Note"). The Bank shall record the date, the
amount and the maturity of each Loan and Money Market Advance
made by it and the date and amount of each payment of
principal made by the Agency with respect thereto and, prior
to any assignment of the Note, shall endorse on the schedule
forming a part thereof appropriate notations to evidence the
foregoing; provided that the failure of the Bank to make any
such recordation or endorsement shall not affect the
obligations of the Agency hereunder or under the Note. The
Bank is hereby authorized by the Agency to so endorse the Note
and attach to and make a part of the Note a continuation of
any such schedule as and when required.
Section 2.06. Security for _Payments: Further
Assurance.
(a) As security for the payment of the Loans, the
Money Market Advances and any other obligations of the Agency
hereunder, the Agency hereby pledges to the Bank and grants to
the Bank a security interest in, all of its right, title and
interest in and to the Available Tax Revenues, which pledge
shall be perfected upon execution hereof without physical
delivery or further act.
(b) The Agency agrees that it will, from time to
time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, any and all financing
statements, if applicable, and all other further instruments
as may be required by law or as shall reasonably be requested
by the Bank for the perfection of the security interest
granted under this Section and for the preservation and
protection of all rights of the Bank under this Section.
Section 2.07. Interest Interest Periods.
(a) The Agency agrees to pay interest in respect of
the unpaid principal amount of each Loan from the date the
proceeds thereof are made available to the Agency until the
maturity thereof (whether by acceleration or otherwise) at a
rate per annum, which shall, (i) in the case of Euro-Dollar
Loans, during each Interest Period applicable thereto, be 1/2
of 1% in excess of the Adjusted London Interbank Offered Rate
for such Interest Period and (ii) in the case of Base Rate
Loans, be the Base Rate in effect during each day.
�1 J 10
(b) The Agency agrees to pay interest in respect of
�.� the unpaid principal amount of each Money Market Advance from
the date the proceeds thereof are made available to the Agency
until the maturity or prepayment thereof (whether by
acceleration or otherwise) at the rate per annum quoted for
such Money Market Advance by the Bank and accepted by the
Agency.
(c) Accrued interest on Loans and Money Market
Advances shall be payable (i) on the last day of each Interest
Period applicable thereto and, (A) in the case of an Interest
Period with respect to a Euro-Dollar Loan in excess of 3
months, on each date occurring at 3-month intervals after the
first day of such Interest Period and (B) in the case of an
Interest Period with respect to a Money Market Advance in
excess of 90 days, on each date occurring at 90-day intervals
after the first day of such Interest Period, (ii) at maturity
(whether by acceleration or otherwise), (iii) upon prepayment,
and (iv) if the Loans and Money Market Advances are not paid
in full at maturity, at any tire after maturity upon demand.
(d) Overdue principal and, to the extent permitted
by law, overdue interest in respect of each Loan and Money
Market Advance shall bear interest payable upon demand for
each day until paid at a rate per annum equal to 2% in excess
of the higher of (i) the rate of interest applicable to such
J Loan or such Money Market Advance and (ii) the Base Rate in
effect for such day. Any other amount hereunder that is not
paid when due shall bear interest at a rate per annum equal to
2% in excess of the Base Rate in effect for each day that such
amount remains past due. Such amounts shall be payable upon
demand.
Section 2.08. Jerrination� or Reduction of
Commitment. The Commitment shall terminate on the Expiry
Date. At any time prior to the Expiry Date the Agency may,
upon at least 3 Business Days' prior irrevocable written
notice to the Bank, (a) terminate the Commitment at any time,
if no Loans or Money Market Advances are outstanding at such
time or (b) reduce from time to time by an aggregate amount of
$500,000 or $100,000 multiples in excess thereof, the
Commitment in excess of the aggregate outstanding principal
amount of the Loans and Money Market Advances.
Section 2.09. Ontional Prepayments. The Agency
may, subject to the payment of Breakage Costs as provided in
Section 2.13, if any, that may result from such prepayment,
upon at least (i) one Business Day's notice to the Bank in the
case of Base Rate Loans and (ii) three Euro-Dollar Business
Days' notice to the .Bank in the case of Euro-Dollar Loans,
prepay any Loan without premium in whole at any time or from
time to time in part in amounts aggregating $500,000 or any
$100,000 multiple in excess thereof by paying to the Bank the
principal amount being prepaid together with accrued interest
thereon to the date of prepayment and a $500 administrative
fee, provided that in the case of a Euro-Dollar Loan no
partial prepayment shall reduce the outstanding principal
balance of any Euro-Dollar Loan to less than $500,000. Any
notice of prepayment pursuant to this Section shall specify
the Borrowing pursuant to which such Loan was made. Money
Market Advances may not be optionally prepaid.
Section 2.10. Mandatory Prepayment.
(a) The Agency shall prepay the principal amount of
any Loans and Money Market Advances then outstanding together
with all accrued and unpaid interest thereon and Breakage
Costs (as provided in Section 2.13) that may result from such
prepayment concurrently with the issuance by the Agency of any
bonds, notes, certificates of participation or other evidence
of indebtedness secured by Available Tax Revenues for borrowed
money after the date hereof. If less than all outstanding
Loans and Money Market Advances are to be prepaid under this
Section, the Agency may specify in writing to the Bank the
Loans or Money Market Advances to be prepaid and the
Borrowings pursuant to which such Loans or Money Market
Advances were made, provided that if after any such prepayment
any Euro-Dollar Loan or Money Market Advance remains
J outstanding with a principal balance less than $500,000 such
Euro-Dollar Loan or Money Market Advance shall automatically
be converted to a Base Rate Loan. In the absence of a
designation by the Agency of the specific Loans or Money
Market Advances to be prepaid, the Bank shall make such
designation in its sole discretion.
(b) Notwithstanding the foregoing, if Breakage
Costs in accordance with the application of Section 2.13 would
result from a prepayment required by this Section other than
on the last day of an Interest Period, the Agency may, at its
option by written notice to the Bank, elect to escrow either
(i) the amount of proceeds received from the issuance of
bonds, notes, certificates of participation or other evidence
of indebtedness, or, if the amount of such proceeds exceeds
the aggregate principal amount of outstanding Loans and Money
Market Advances together with accrued and unpaid interest
thereon, an amount of proceeds equal to the aggregate
principal amount of outstanding Loans and Money Market
Advances together with accrued and unpaid interest thereon, or
(ii) Available Tax Revenues in an amount equal to the
aggregate principal amount of outstanding Loans and Money
Market Advances together with accrued and unpaid interest
thereon, until the earlier of (A) the last day of each
Interest Period with respect to each outstanding Loan or Money
Market Advance, (B) the date on which no Breakage Costs would
12
result from such prepayment or (C) 90 days from the date of
�✓ the initiation of the escrow; provided that in any such case
the Bank Must first consent to the escrow arrangements
proposed by the Agency, which consent shall not be
unreasonably withheld.
Section 2.11. General Provisions as to Payments.
The Agency shall make each payment of principal of, and
interest on, the Loans, Money Market Advances and of
commitment fees hereunder not later than 12:00 noon (New York
City time) on the date when due in funds immediately available
in New York City at the principal office of the Bank for the
account of (i) the Domestic Lending Office in the case of Base
Rate Loans and commitment fee payments, (ii) the Euro-Dollar
Lending Office in the case of Euro-Dollar Loans and (iii) the
Domestic Lending Office in the case of Money Market Advances.
Whenever any payment of principal of, or interest on, Euro-
Dollar Loans shall be due on a day which is not a Euro-Dollar
Business Day, the date of payment thereof shall be extended to
the next succeeding Euro-Dollar Business Day unless as a
result thereof such Euro-Dollar Business Day falls in another
calendar month, in which case it shall be advanced to the next
preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, Base Rate Loans or of any
commitment fee shall be due on a day which is not a Business
Day, the date of payment thereof shall be extended to the next
succeeding Business Day. Whenever any payment of principal
of, or interest on, Money Market Advances shall be due on a
day which is not a Business Day, the date of payment thereof
shall be extended to the next succeeding Business Day. If the
date for any payment of principal is extended by operation of
law or otherwise, interest shall be payable for such extended
time.
Section 2.12. Computation of Interest and Fees.
Interest based on the Prime Rate and commitment fees shall be
computed on the basis of a year of 365 days (or 366 days in a
leap year) and paid for actual days elapsed (including the
first day but excluding the last day) . All other interest and
fees shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed (including the
first but excluding the last day).
Section 2.13. Funding Losses. If the Agency makes
any payment of principal with respect to any Euro-Dollar Loan
or Money Market Advance on any day other than at the last day
of an Interest Period applicable to such Loan or Money Market
Advance or if the Agency fails to borrow any Euro-Dollar Loan
or Money Market Advance after notice has been given to the
Bank in accordance with Section 2.02 (a) or Section 2.03 (d) , as
the case may be, the Agency shall reimburse the Bank within 15
days after demand for any Breakage Costs incurred by it (or by
'�'.� 13
an existing or prospective Participant in the related Loan or
�..� Money Market Advance); provided that the Bank shall have
delivered to the Agency a certificate as to the amount of such
Breakage Cost, which certificate shall be conclusive in the
absence of manifest error.
ARTICLE III
CHANGES IN CIRCUMSTANCES AFFECTING THE LOANS
Section 3.01. Increased Cost of Maintaining the
Commitment and Reduced Return.
(a) If, after the date hereof and prior to the date
on which all amounts owing under the Note have been repaid,
the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof or compliance by the Bank (or its Euro-
Dollar Lending Office) with any request or directive (whether
or not having the force of law) of any such authority, central
bank or comparable agency:
(i) shall subject the Bank (or its Euro-Dollar
Lending Office) to any tax, duty or other charge with
�J respect to its obligation to make Euro-Dollar Loans or
Money Market Advances, its Euro-Dollar Loans or Money
Market Advances, or the Note, or shall change the basis
of taxation of payments to the Bank (or its Euro-Dollar
Lending Office) of the principal of or interest on its
Euro-Dollar Loans or Money Market Advances or in respect
of any other amounts due under this Agreement, in respect
of its Euro-Dollar Loans or Money Market Advances or its
obligation to make Euro-Dollar Loans (except for changes
in the rate of tax on the overall net income of the Bank
or its Euro-Dollar Lending Office) imposed by the juris-
diction in which the Bank, s principal executive office or
its Euro-Dollar Lending Office is located; or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement
(including, without limitation, any imposed by the Board
of Governors of the Federal Reserve System, but excluding
with respect to any Euro-Dollar Loan any such requirement
included in an applicable Euro-Dollar Reserve Percentage)
against assets of, deposits with or for the account of,
or credit extended by, the Bank (or its Euro-Dollar
Lending Office) or shall impose on the Bank (or its Euro-
Dollar Lending Office) or on the London interbank market
any other condition affecting its obligation to make or
14
J maintain Euro-Dollar Loans or Money Market Advances, its
Euro-Dollar Loans or Money Market Advances or the Note;
and the result of any of the foregoing is to increase the cost
to the Bank (or its Euro-Dollar Lending Office) of making or
maintaining any Euro-Dollar Loan or Money Market Advance, or
to reduce the amount of any sum received or receivable by the
Bank (or its Euro-Dollar Lending Office) under this Agreement
or under the Note with respect thereto, by an amount deemed by
the Bank to be material, then, within 30 days after demand by
the Bank, the Agency agrees to pay or cause to be paid to the
Bank solely from Available Tax Revenues such additional amount
or amounts as will compensate the Bank for such increased cost
or reduction.
(b) If after the date hereof and prior to the date
on which all amounts owing under the Note have been repaid,
the Bank shall have determined that the adoption of any
applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on the
capital of the Bank (or its Parent) as a consequence of its
obligations hereunder to a level below that which the Bank (or
its Parent) could have achieved but for such adoption, change
or compliance (taking into consideration the Bank's policies
with respect to capital adequacy) by an amount deemed by the
Bank to be material, then from time to time, within 30 days
after demand by the Bank, the Agency shall pay to the Bank (or
its Parent) solely from Available Tax Revenues such additional
amount or amounts as will compensate the Bank for such
reduction.
(c) The Bank will pronptly notify the Agency of any
event of which it has knowledge occurring after the date
hereof, which will entitle the Bank to an additional amount or
amounts pursuant to this Section. A certificate of the Bank
claiming an additional amount or amounts under this
Section, and setting forth (i) the additional amount or
amounts to be paid to it hereunder and (ii) a reasonable
explanation of such additional amount or amounts, shall
constitute a demand for payment and shall be conclusive in the
absence of manifest error. In determining such amount, the
Bank may use any reasonable averaging and attribution methods.
�J 15
Section 3.02. Basis for Determining Interest Rate
Unavailable. If on or prior to the first day of any Interest
Period deposits in Dollars (in the applicable amounts) are not
being offered to the Bank in the London interbank market for
such Interest Period, the Bank shall forthwith give notice
thereof to the Agency, whereupon the obligation of the Bank to
make Euro-Dollar Loans or offer Money Market Advances shall be
suspended until the Bank notifies the Agency that the
circumstances giving rise to such suspension no longer exist.
Unless the Agency notifies the Bank at least two Business Days
before the date of any Euro-Dollar Loan for which a Notice of
Borrowing has previously been given that it elects not to
borrow on such date, such Loan shall instead be made as a Base
Rate Loan.
Section 3.03. Illegality. If after the date
hereof, the Bank shall have determined that the adoption of
any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable
agency charged with the interpretation or administration
thereof, or compliance by the Bank (or its Euro-Dollar Lending
Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for the
Bank (or its Euro-Dollar Lending Office) to make, maintain or
fund its Euro--Dollar Loans or Money Market Advances, the Bank
shall forthwith so notify the Agency, whereupon the obligation
of the Bank to make Euro-Dollar Loans or offer Money Market
Advances shall be suspended. Before giving any notice to the
Agency pursuant to this Section, the Bank will designate a
different Euro-Dollar Lending Office if such designation will
avoid the need for giving such notice and will not, in the
judgment of the Bank, be otherwise disadvantageous to the Bank
and if the Agency does not object to such different Euro-
Dollar Lending Office. If the Bank shall determine that it
may not lawfully continue to maintain and fund any of its
outstanding Euro-Dollar Loans or Money Market Advances to
maturity and shall so specify in such notice, the Agency shall
immediately convert the then outstanding balance of each such
Euro-Dollar Loan or such Money Market Advance to a Base Rate
Loan and, at the time of conversion, pay all accrued interest
thereon and compensation costs, if any.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Effectiveness. This Agreement shall
become effective on the date that each of the following
conditions shall have been satisfied (the "effective Date"):
16
(a) receipt by the Bank of a duly executed counter-
part of this Agreement -signed by the Agency;
(b) receipt by the Bank of the Note, duly executed
by the Agency and dated the Effective Date;
(c) receipt by the Bank, on or prior to the
Effective Date, of an opinion of Stradling, Yocca,
Carlson & Rauth as counsel to the Agency and an opinion
of the office of the City Attorney of the City of
Huntington Beach, addressed to the Bank, dated the
Effective Date and, when considered together, including
substantially all items set forth in the form attached
hereto as Exhibit C;
(d) receipt by the Bank, on or prior to the
Effective Date, of copies of the resolutions of the
Agency, certified by the secretary or an assistant
secretary of the Agency, authorizing the execution,
delivery and performance by the Agency of this Agreement
and the Note;
(e) receipt by the Bank, on or prior to the
Effective Date, of certified copies of all approvals,
authorizations and consents of any trustee or holder of
any indebtedness or obligation of the Agency or any
governmental agency or public authority, necessary for
the Agency to enter into this Agreement and the Note and
the transactions contemplated herein and in the Note;
(f) receipt by the Bank, on or prior to the
Effective Date, of a certificate of the secretary or an
assistant secretary of the Agency substantially in the
fora attached hereto as Exhibit D certifying the names
and true signatures of the officers of the Agency
authorized to sign this Agreement and the Note;
(g) the following statements shall be true and
correct on the Effective Date, and the Bank shall have
received a certificate signed by the Executive Director
of the Agency, dated the Effective Date, stating that:
(i) the representations and warranties con-
tained in this Agreement and each certificate
furnished or delivered by the Agency to the Bank
pursuant hereto are true and correct on and as of
the Effective Date as though made on and as of such
date; and
(ii) no Default or Event of Default has oc-
curred and is continuing or would result from the
execution and delivery by the Agency of this
�" J 17
Agreement or the Note or the making of Loans or
Money Market Advances hereunder; and
(h) receipt by the Bank, on or prior to the
Effective Date, of such other documents, instruments,
approvals (and, if requested by the Bank, certified
duplicates of executed copies thereof) or opinions as the
Bank may reasonably request.
Section 4.02. Loans and Money Afarket Advances. The
obligation of the Bank to make a Loan or a Money Market
Advance on the occasion of any Borrowing is subject to the
satisfaction of the following conditions:
(a) receipt by the Bank of a Notice of Borrowing
pursuant to Section 2.02, in the case of a Loan, and
receipt by the Bank of a notice of acceptance pursuant to
Section 2.03, in the case of a Money Market Advance;
(b) the fact that, immediately after the making of
such Loan or Money Market Advance, no Default or Event of
Default shall have occurred and be continuing;
(c) the fact that the representations and warranties
of the Agency contained in this Agreement shall be true
on and as of the date of such Borrowing; and
(d) the fact that, immediately after such Borrowing,
the aggregate outstanding principal amount of all Loans
and Money Market Advances shall not exceed the amount of
the Commitment.
Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Agency on the date of such
Borrowing as to the facts specified clauses (b), (c) and (d)
of this Section.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Agency hereby represents and warrants to the
Bank that:
Section 5.01. Due_ Creation. The Agency is a
redevelopment agency duly created, established and authorized
to transact business and exercise its powers under and
pursuant to the Community Redevelopment Law (Part 1 of
Division 24 of the Health and Safety Code of the State of
California), and the Agency has the power to own its
properties, to carry on its affairs as now being conducted and
to execute and deliver this Agreement and the Note.
18
Section 5.02. Due -Authorization: No Violation; No
Default. The execution, delivery and performance by the
Agency of this Agreement and the Note and the other documents
contemplated hereby and thereby have been duly authorized by
all necessary actions and does not and will not (a) violate
any provision of any law, rule, regulation (including, without
limitation, Regulation U of the Board of Governors of the
Federal Reserve System), order, writ, judgment, injunction,
decree, determination or award presently in effect having
applicability to the Agency or of the charter or bylaws of the
Agency, (b) result in a breach or constitute a default under
any resolution, ordinance, indenture, trust agreement, loan or
credit agreement, lease, instrument or other contractual
restriction binding on or affecting the Agency or by which it
or its properties may be bound or affected, or (c) result in
or require the creation or imposition of any lien,, security
interest or other charge or encumbrance upon or with respect
to any of the properties now owned or hereafter acquired by
the Agency. The Agency is not in violation of or in default
in any respect under any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or
any such resolution, ordinance, indenture, trust agreement,
loan or credit agreement, lease, instrument or other
contractual restriction.
Section 5.03. Approvals. No consent, approval or
J other action by or any notice to or filing or registration
with any court or administrative or governmental body is or
will be necessary to be made or obtained by the Agency for the
due execution, delivery and performance by the.Agency of this
Agreement, the Note or any other documents contemplated
hereby.
Section 5.04. Enforceat_Jlity. This Agreement
constitutes a legal, valid and binding obligation of the
Agency, enforceable against the Agency in accordance with its
terms, subject as to enforceability, to bankruptcy, insol-
vency, moratorium, or other laws and equitable principles
relating to or affecting creditors' rights generally from time
to time in effect.
Section 5.05. Litigation. There are no actions,
suits, or proceedings pending with service of process
accomplished or, to the best knowledge of the Agency after due
inquiry, threatened against or affecting the Agency, or any
properties or rights of the Agency, by or before any court,
arbitrator, or administrative or governmental body which
(a) if determined adversely to the Agency would adversely
affect the Agency's ability to perform its obligations under
this Agreement or (b) relate to the execution, delivery or
performance by the Agency of this Agreement and the Note.
19
Section 5.06. Disclosure. There is no fact known
to the Agency that materially adversely affects or in the
future may (so far as the Agency can now foresee) materially
adversely affect the ability of the Agency to perform its
obligations hereunder that has not been set forth in this
Agreement or in the other documents, certificates, and
statements furnished to the Bank by or on behalf of the Agency
prior to the date hereof in connection with the transactions
contemplated hereby.
Section 5.07. No Sovereign Imriunity. The Agency
does not enjoy any rights of immunity on the grounds of
sovereign immunity in respect of its obligations under this
Agreement or the Note.
Section 5.08. Pledged Revenues. There is no lien
on the Available Tax Revenues with a right of payment prior to
or on a parity with the security interest created hereunder in
the Available Tax Revenues. The Bank has a perfected security
interest in the Available Tax Revenues and is not required to
take further action to perfect or maintain such security
interest. Schedule 1 sets forth a true and correct estimation
by the Agency (based upon information relating to Tax Revenues
provided by the Auditor -Controller of the County of orange) of
its tax revenue surplus for the Agency's 1991-92 fiscal year
and the amount set forth on such Schedule as "Surplus" is the
. Agency's estimation of the Available Tax Revenues for such
fiscal year. Schedule 2 sets forth a projection of the
Agency's tax increment revenues for its 1991-92, 1992-93,
1993-94, 1994-95 and 1995-96 fiscal years, which projection is
a true and fair estimate of the Agency's .tax increment
revenues made on the basis of reasonable assumptions. The
obligations of the Agency under this Agreement are junior in
right of payment only to (a) the holders of the Senior Loan
and (b) the holders of any Indebtedness the proceeds of which
are to be applied to prepay or pay all outstanding Loans and
Money Market Advances in accordance with the provisions of
Section 2.10; provided, however, that the Agency shall be
allowed to make payments upon obligations incurred in the
ordinary course of business, so long as such payments do not
impair the Agency's ability to issue bonds or repay any
outstanding Loans or Money Market Advances; provided, further,
that the Agency shall be permitted to enter into agreements
which create indebtedness for borrowed money payable from the
Available Tax Revenues, other than a "Bond" as defined in
Section 33602 of the California Health and Safety Code, so
long as such indebtedness shall be fully subordinated to the
indebtedness created hereunder and shall not, by its terms,
(i) be payable or (ii) provide for any right of acceleration
until all outstanding Loans and Money Market Advances have
been fully paid.
� 20
Section 5.09. No ERISA Plans. The Agency has not
established, is not a party to and has never contributed to an
employee benefit plan other than a "governmental plan" within
the meaning of Section 414(d) of the Code or Section 3(32) of
ERISA.
Section 5.10. Environmental Matters. In the
ordinary course of its affairs, the Agency conducts an ongoing
review of the effect of Environmental Laws on the affairs,
operations and properties of the Agency, in the course of
which it identifies and evaluates associated liabilities and
costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of any
properties presently or previously owned or operated, any
capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards
imposed by law or as a condition of any license, permit or
contract, any related constraints on operating activities and
any actual or potential liabilities to third parties,
including employees, and any related costs and expenses). on
the basis of this review, the Agency has reasonably concluded
that Environmental Laws are unlikely to have a material
adverse effect on the Agency's ability to perform its
obligations under this Agreement.
�J ARTICLE VI
COVENANTS
So long as any Loan or Money Market Advance remains
outstanding or the Commitment has not terminated:
Section 6.01. COrpliance with Laws. The Agency
covenants that it will comply with the requirements of all
applicable laws, rules, regulations, and orders of any
governmental authority having jurisdiction over the Agency,
non-compliance with which would materially adversely affect
its ability to perform its obligations under this Agreement or
the Note.
Section 6.02. Agency to Maintain Existence. Except
as required by the Constitution and laws of the State of
California, the Agency agrees that it will maintain its exis-
tence as a redevelopment agency under the Constitution and
laws of the State of California.
Section 6.03. Notice of Default. The Agency will
furnish to the Bank as soon as possible, and in any event
within five Business Days after the discovery by any officer
of the Agency of any Default or Event of Default, an officer's
certificate of the Agency, setting forth the details of such
21
W
Default or Event of Default and the action which the Agency
proposes to take with respect thereto.
. Section 6.04. Further ssu noes. The Agency will
execute, acknowledge where appropriate, and deliver from time
to time promptly at the request of the Bank all such
instruments and documents as in the reasonable opinion of the
Bank are necessary or desirable to carry out the intent and
purposes of this Agreement.
Section 6.05. Books Records: Financial
'a emen s. The Agency will keep proper books of record and
account in which full, true, and correct entries in conformity
with generally accepted accounting principles and all
requirements of law shall be made of all dealings and
transactions relating to the Agency, the Tax Revenues, the
Available Tax Revenues, and, so long as any Loans or Money
Market Advances remain outstanding, will prepare and deliver
to the Bank no later than January 31 next following the end of
each of the Agency's fiscal years, a copy of the Agency's
annual audited financial statements and a copy of the Agency's
annual budget.
Section 6.06. Inspection. The Agency covenants, to
the fullest extent permitted by law, that upon reasonable
notice it will permit any person designated by the Bank in
writing, at the Bank's expense, to visit any of the properties
of the Agency, to examine the books and financial records of
the Agency and make copies thereof or extracts therefrom, and
to discuss the affairs, finances, and accounts of the Agency
with the principal officers of the Agency, as the case may be,
all at such reasonable times and as often as the Bank may
reasonably request.
Section 6.07. No ERISA Plans. The Agency will not
establish, be a party to and will not contribute to any
employee benefit plan other than a "governmental plan" within
the meaning of Section 414 (d) of the Code and Section 3 (32) of
ERISA.
Section 6.08. Limitation on Indebtedness. Except
as expressly authorized by Section 5.08, the Agency will not
incur or suffer to exist any indebtedness for borrowed money
payable from the Available Tax Revenues after the date hereof
unless the proceeds of such indebtedness are applied to prepay
or pay all outstanding Loans and Money Market Advances in
accordance with the provisions of Section 2.10.
22
t I Section 6.09. Use of -Proceeds. No part of the
�J proceeds of any Loan or Money Market Advance hereunder will be
used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate of buying or carrying any
"margin stock" within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System. Prior to the
Expiry Date, the Agency will provide the Bank with a schedule
setting forth the purposes for which the proceeds of each Loan
and Money Market Advance were used.
Section 6.10., hay in Wit_ Deans _ and Money _Market
dv nces. The Agency agrees that it will repay all Loans and
Money Market Advances made hereunder on or prior to the Expiry
Date from either (a) Available Tax Revenues that are currently
held by the Agency or that may be received by the Agency after
the date hereof but prior to the Expiry Date from any source
or (b) the proceeds of bonds, notes, certificates of
participation or other evidences of indebtedness issued by or
on behalf of the Agency after the date hereof but prior to the
Expiry Date. The Agency further agrees that it will use its
best efforts to cause bonds to be issued on or prior to the
Expiry Date to repay all outstanding Loans and Money Market
Advances made hereunder.
ARTICLE VII
J EVENTS OF DEFAULT; REMEDIES
Section 7.01. Events of Default: Remedies. upon
the occurrence of any of the following specified events (each
an "Event of Default"):
(a) the Agency shall fail to pay to the Bank when
due any principal of or interest on any Loan or Money
Market Advance, or any commitment fee or any other amount
payable hereunder; or
(b) the Agency shall fail to observe or perform any
covenant contained in Sections 2.10, 6.02, 6.03, 6.08 or
6.10; or
(c) except as otherwise provided in paragraphs (a)
and (b) above, the Agency shall fail to perform any of
its other covenants,' agreements or obligations hereunder
(including those incorporated herein by reference), under
the Note or under any other document executed in
connection herewith, provided that such failure continues
for more than 30 days after receipt by the Agency of
written notice of such failure to perform by the Bank; or
(d) any material representation or warranty made by
the Agency hereunder or in any report, certificate,
23
financial statement, document or other instrument
provided or to be provided in connection herewith shall
have been or shall be materially false at the time when
made; or
(e) the Agency shall (i) voluntarily commence any
proceeding or file any petition seeking relief under
Title 11 of the [United States Code (the "Bankruptcy
Code") or any other Federal, state or foreign bankruptcy,
insolvency or similar law, (ii) consent to the
institution of, or fail to controvert in a timely and
appropriate manner, any such proceeding or the filing of
any such. petition, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian,
sequestrator or similar official for the Agency or for a
substantial part of its property, (iv) file an answer
admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally
to pay its debts as they become due or (vii) take action
for the purpose of effecting any of the foregoing; or
(f) an involuntary proceeding shall be commenced or
an involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect of
the Agency, or of a substantial part of its property,
under the Bankruptcy Code or any other Federal., state or
foreign bankruptcy, insolvency or similar law or (ii) the
appointment of a receiver, trustee, custodian,
sequestrator or similar official for the Agency or for a
substantial part of its property, and such proceeding or
petition shall continue undismissed and unstayed for 60
days; or an order or decree for relief shall be entered
against the agency under the Bankruptcy Code as now or
hereafter in effect; or
(g) any default or event of default shall have
occurred and be continuing under any agreement evidencing
indebtedness of the Agency secured by a pledge of Tax
Revenues and such default or event of default shall
continue beyond any applicable grace period provided in
any such agreement; or
(h) any default in the observance or performance of
any agreement or condition in any agreement evidencing
indebtedness of the Agency secured by a pledge of Tax
Revenues or other instrument securing such agreement
shall have occurred, the effect of which default or other
event or condition is to cause, or permit the holder or
holders (or a trustee or agent on behalf of such holder
or holders) to cause (determined without regard to
24
whether any notice is required), any such indebtedness to
become due prior to its stated maturity; or any
indebtedness of the Agency secured by Tax Revenues shall
be declared due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment,
prior to the stated maturity thereof;
then, and in every such event, (1) in the case of the Events
of Default specified in paragraphs (e) and (f) above, the
Commitment shall thereupon automatically be terminated and the
principal of and accrued interest on the Note shall
automatically become due and payable without presentment,
demand, protest or other notice or formality of any kind, all
of which are hereby expressly waived, (2) in the case of any
other Event of Default specified above, the Bank may, by
notice in writing to the Agency, terminate the Commitment
hereunder, if still in existence, and it shall thereupon be
terminated, and the Bank may, by notice in writing to the
Agency, declare the Note and all other sums payable hereunder
to be, and the same shall forthwith become, due and payable
without presentment, demand, protest or other notice or
formality of any kind, all of which are hereby expressly
waived, and (3) in the case of any Event of Default specified
above, the Bank may, take whatever action at law or in equity
that may appear necessary or desirable to enforce the Bank's
lien hereunder on the Available Tax Revenues.
Section 7.02. Exercise of Rights. No failure or
delay on the part of the Bank to exercise any right, power or
privilege under this Agreement and no course of dealing
between the Bank and the Agency or any other party shall
operate as a waiver of any such right, power or privilege, nor
shall any single or partial exercise of any such right, power
or privilege preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The
rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which the Bank
would otherwise have pursuant to law or equity. No notice to
or demand on any party in any case shall entitle such party to
any other or further notice or demand in similar or other
circumstances, or constitute a waiver of the right of the
other party to any other or further action in any
circumstances without notice or demand.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Ilotices. All notices, requests and
other communications provided for hereunder shall be in
writing (including bank wire, facsimile transmission or
similar writing). Each such notice, request or other
25
1% .
communication shall be effective (a) if given by mail, 3 days
after the date of deposit in the mails, postage prepaid,
addressed as specified in this Section, (b) if given by
facsimile transmission, when sent to the facsimile number set
forth below (or such other number as may be provided by one
party hereto to the other party hereto in writing), provided
that a copy of such notice is also given by mail or (c) if
given by other means, when delivered to the address specified
in this Section. Notwithstanding the foregoing, notices to
the Bank pursuant to Section 2.02, 2.03 and 2.09 which are
given otherwise than by facsimile transmitting machine shall
not be effective until received by the Bank. Any such notice,
request or other communication shall be delivered or addressed
as follows:
if to the Agency:
and if to the Bank:
Redevelopment Agency of the
City of Huntington Beach
2000 Main Street
Huntington Beach, California
92648
Attention: Executive Director
Telephone: (714) 536-5575
Facsimile: (714) 374-1590;
Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, New York 10260
Attention: Credit Administration
Gerald M. Corso
Telephone: (212) 648-6812
Facsimile: (212) 648-5022;
or at such other address as shall be designated by any such
party in a written notice to the other party.
Section 8.02. Amendment pnd Waivers. None of the
provisions of this Agreement may be amended, changed, waived,
discharged or terminated except by an instrument in writing
signed and duly executed by the parties hereto.
Section 8.03. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and shall
inure to the benefit of the Agency and the Bank and their
respective successors and assigns, except that the Agency may
not assign or otherwise transfer any of its rights or
obligations under this Agreement without the prior written
consent of the Bank.
(b) The Bank may at an
banks or other institutions (each
proportionate part of all, of its
26
y
time assign to one or more
an "Assignee"), all, or a
rights under this Agreement
and the Note. The Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in the Commitment or any or all of its
Loans and Money Market Advances. In the event of any such
grant by the Bank of a participating interest to a
Participant, whether or not upon notice to the Agency, the
Bank shall remain responsible for the performance of its
obligations hereunder, and the Agency shall continue to deal
solely and directly with the Bank in connection with the
Bank's rights and obligations under this Agreement. Any
agreement pursuant to which the Bank may grant such a
participating interest shall provide that the Bank shall
retain the sole right and responsibility to enforce the
obligations of the Agency hereunder including, without
limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that
such participation agreement may provide that the Bank will
not agree to any modification, amendment or waiver of this
Agreement which (i) increases or decreases the Commitment of
the Bank, (ii) reduces the principal of or interest on any
Loan or Money Market Advance or fees hereunder or (iii)
postpones the date fixed for any payment of principal of or
interest on any Loan or Money Market Advance or any fees here-
under without the consent of the Participant. The Agency
agrees that each Participant shall, to the extent provided in
its participation agreement, be entitled to the benefits of
�J Sections 2.13 and 3.01 hereof with respect to its parti-
cipating interest.
(c) The Bank may at any time assign all or any
portion of its rights under this Agreement and the Note to a
Federal Reserve Bank. No such assignment shall release the
Bank from its obligations hereunder.
(d) No Assignee, Participant or other transferee of
the Bank's rights shall be entitled to receive any greater
payment under Section 3.01 hereof than the Bank would have
been entitled to receive with respect to the rights trans-
ferred unless such transfer is made with the Agency's prior
written consent or at a time when the circumstances giving
rise to such greater payment did not exist.
Section 8,04. x e ses• ocume tar Taxes•--Indery
}cation}.
(a) The Agency shah, pay (i) fees and disbursements
of White & Case, special counsel to the Bank (which fees and
disbursements shall not exceed $25,000) in connection with the
negotiation, preparation and execution of this Agreement and
the other documents described herein, (ii) all out-of-pocket
expenses and internal charges of the Bank (including fees and
disbursements of counsel to the Bank) in connection with any
�.J
27
waiver or consent hereunder or any amendment hereof or any
Default or alleged Default hereunder and (iii) if there is an
Event of Default, all out-of-pocket expenses and internal
charges incurred by the Bank (including fees and disbursements
of counsel and time charges of attorneys who may be employees
of the Bank) in connection with such Event of Default and
collection and other enforcement proceedings resulting
therefrom. The Agency shall indemnify the Bank against any
transfer taxes, documentary taxes, assessments or charges made
by any governmental authority by reason of the execution and
delivery of this Agreement or the Note.
(b) To the extent permitted by law, the Agency
agrees to indemnify the Bank and hold the Bank harmless from
and against any and all liabilities, losses, damages, costs
and expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be
incurred by the Bank in .connection with any investigative,
administrative or judicial proceeding (whether or not the Bank
shall be designated a party thereto) relating to or arising
out of this Agreement or any actual or proposed use of
proceeds of Loans and Money Market Advances hereunder;
provided that the Bank shall not have the right to be
indemnified hereunder for its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
This indemnification shall survive the termination of the
Commitment and the payment in full of the Loans and Money
Market Advances.
Section 8.05. Headings; -Table of Contents. Article
and Section headings in this Agreement and the Table of
Contents are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any
other purpose.
Section 8.06. Severability of Provisions. Any pro-
vision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforce-
ability without invalidating the remaining provisions hereof
or affecting the validity or enforceability of such provision
in any other jurisdiction.
Section 8.07. Counterparts; Integration. This
Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of
which counterparts, when so executed and delivered, shall be
deemed to be an original and all of which counterparts, taken
together, shall constitute one and the same Agreement. This
Agreement constitutes the entire agreement and understanding
between the parties hereto and supersedes any and all prior
28
agreements and understandings, oral or written, relating to
the subject matter hereof.
Section 8.08. Governing Law and Jurisdiction.
(a) This Agreement shall be deemed to be a contract
made under the laws of the State of California and for all
purposes shall be construed in accordance with the laws of
said state, without regard to the principles of conflicts of
laws. Any action or proceeding arising out of or relating to
this Agreement or the Note shall be heard and determined in an
appropriate state or Federal court in the County of Los
Angeles, California. The Agency irrevocably waives, to the
fullest extent permitted by law, any objection which it may
now or hereafter have to the laying of venue of any such suit,
action or proceeding brought in such courts and any claim that
any such suit, action or proceeding has been brought in an
inconvenient forum. The Agency irrevocably consents to the
service of any and all process in any such suit, action or
proceeding by mailing or delivering copies of such process to
the Agency's General Counsel at the Agency's address provided
in Section 8.01. The Agency agrees that a final judgment
(after all appeals have been exhausted) in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. All mailings under this Section shall be by
certified mail, return receipt requested.
(b) Nothing in this Section shall affect the right
of the Bank to serve legal process in any other manner
permitted by law or affect the right of the Bank to bring any
suit, action or proceeding against the Agency or its property
in the courts of any other jurisdiction.
Section 8.09. Waiver of Jury Trial. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 8.10. 110 Third Party Beneficiaries. Each
party agrees that this Agreement shall not benefit or create
any right or cause of action in or on behalf of any person
other then the parties hereto,
29
IN WITNESS WHEREOF, each of the parties hereto has
caused a counterpart of this Agreement to be duly executed and
delivered as of the date first above written.
Approved as to Form:
Byfz' Y&, ey- -.. k—ssI NJ
ociate Counsel
REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
Qe c aut i erector
MORGAN GUARANTY
OF N YORK
By
e esident VicPr
30
TRUST COMPANY
FROM:CITY CF HR-ADIM. SVCS. TO: 213 617 0376 APR 17, 1992 3:12.3m #622 p.22
Schedule I
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
MAIN PIER PROJECT AREA
CALCULATION OF TAX REVENUE SURPLUS
F/Y 1991-92
Sources:
Tax Increment $2,230,034
Utility Roll Revenue (1) 61,787
Supplomental Assessed Revenue (1) 305,000
Interest Income —9.000
Total 12 495 =1
Uses:
Huntington Beach Redevelopment
Projects TABS, 1988 $862.474
Housing Set —Aside 458.364
Tax Sharing Agreement 0
County Fees 0
Total 51.121 838
Surplus 51-284.283
(1) Estimate
�.J 11PPERST:389
A -96X CITY OF HE-ADI& SVCS 04-17-92 03:23FU F002 #22
Schedule 2
PROJECTION OF TAX INCREMENT REVENUES
VAIN
PIER PROJECT
AREA
1991/92
1992/93
1993194
1994/95
1995/9E
(Estimated)
(Projected)
(Projected)
• (Projected)
(Projected)
SECURfDYALULTIQN
Land(1)
112,077.604
112.077,604
114.319.156
116,605.539
118,937,E50
Improvements(l)
137,666,136
137,666,136
140.419.459
143,221,84E
145,092.4,5
+ General Increase (2%)
N/A
4.994.875
5.094.772
5.196,668
5,3DO.601
+ Projected Improvements
N/A
C
0
O
0
Total Land i Improvements
249.743.740
254.738.615
259.833.387
265.030.055
270,330.656
+ Personal Property
52,095
52,095
52,095
S2,095
52.095
+ Utilities
600
600
600
600
600
Total Secured Valuation
249.796.435
254.791,310
259.B86.082
265.082,750
270,383.351
— Base Year
46,534,392
46,534.392
46,534.392
46.534,392
46.534.392
INCREMENT VALUATION
203.262,043
208,256.918
213,351.690
218.50.358
223.90 ,959
a Tax Rate
1.06809%
1.0611Z
1.048%
1.040:
1.030%
Available Secured Increment
2,171,022
2,209.B14
2,235.926
2.272,903
2.305.644
X Collection Rate
9QX
98%
98%
98:
98--
NET SECURED INCREMENT REVENUE
2.127.601
2,165,618
2.191,207
2.227.445
2,259.531
illmi
Land 9 Iirprovements(1)
10.898.146
10.898,146
11,116.109
11,338,431
11,565.200
General Increase (2%)
N/A
217,963
222,322
226.769
231.304
Total Land R Improvements
10,698,146
11,116.109
11,338.431
11.565,200
11.796.504
4 Personal Proprrty
9,601.641
9.601,641
9,601,641
9,601.641
9.601,641
Total Unsecured Valuation
20.499,787
20.717,750
20.940.072
21.166.041
21.398.145
— Base Year
10,453.771
10,453,771
10,453,771
10.453,771
10.453.771
I1"MENT VALUATION
10.045.016
10,263.979
10.486,301
10.713,070
10.944,374
t ax Rate
1.07330:
1.0681%
1.061%
1.048%
1.04C%
A wriable Unsecured Increment
107,624
109,629
111,270
112,273
113.821
x Collection Rate
M
95W.
95%
95%
95:
NET UNSECURED INCREMENT REVENUE 102.433
104,147
105.707
106.659
108.130
UNITARY REVENUE
61,787
61.767
61.787
61,787
61.787
TOTAL VALUATION
$270.296.222
$275,509.060
$280.826.154
$286,249.591
$291,781,495
TOTAL INCREMENT VALUATION
213.308,059
218,520.097
223.637.991
229.261.428
234.793.333
TOTAL EST. INCREMENT REVENJE
2,291,820
2,331,551
2,358,700
2,395.891
2.429.445
— 20z Housing Set -Aside
458.364
466,310
471.740
479.178
485,890
NET INCREMENT REVENUE
$1,633.456
Si,B651241
$1,586.960
$1.916,713
$1,943.559
(1) The figures have been adjusted to include
the waterfront Hilton on the secured roll ($42.108.647) instead
of the unsecured roll. Personal Property
($6,534.713) remains on the unsecured roll. In addition, the
land and improvements unsecured Valuation
has been reduced
by $7,932,855, the amount of escaped assessments
included on the unsecured
roll.
Sources: Orange County Assessor; Orange County Auditor —Controller;
Verna::a Wolfe Associates. Inc.
7-teS B
EXHIBIT A
NOTE
U.S. $4,350,000 May 1992
Huntington Beach, California
FOR VALUE RECEIVED, THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH, a redevelopment agency created,
established and authorized to transact business and exercise
its powers under the laws of California (the "Agency"),
hereby unconditionally promises to pay from Available Tax
Revenues to the order of MORGAN GUARANTY TRUST COMPANY OF NEW
YORK (the "Bank") at its Domestic Lending Office, the unpaid
principal amount of each Loan and Money Market Advance made
by the Bank to the Agency pursuant to the Credit Agreement
referred to below on the last day of the Interest Period
relating to such Loan. The Agency promises to pay from
Available Tax Revenues interest on the unpaid principal
amount of each such Loan and Money Market Advance on the
dates and at the rate or rates provided for in the Credit
Agreement.
All such payments of principal and interest shall
be made in lawful money of the United States'of America in
Federal or other immediately available funds at the office of
the Bank located at 60 Wall Street, New York, New York 10260-
0060.
All Loans and Money Market Advances made by the
Bank, the maturities thereof and all repayments of the
principal thereof shall be recorded by the Bank and, prior to
any assignment hereof, appropriate notations to evidence the
foregoing information with respect 'to each such Loan and
Money Market Advance then outstanding shall be endorsed by
the Bank on the schedule attached hereto and made a part
hereof; provided that the failure of the Bank to make any
such recordation or endorsement shall not affect the
obligations of the Agency hereunder or under the Credit
Agreement.
This Note is the Note referred to in the Credit
Agreement dated as of May _, 1992, by and between the Agency
and the Bank (as the same may be amended from time to time,
the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings. Reference
is made to the Credit Agreement for provisions for the
../ A-1
prepayment hereof and the acceleration of the maturity
hereof.
THE PAYMENT OBLIGATIONS OF THE AGENCY UNDER THE
CREDIT AGREEMENT AS EVIDENCED BY THIS NOTE ARE NOT A DEBT OF
THE CITY OF HUNTINGTON BEACH, THE COUNTY OF ORANGE, THE STATE
OF CALIFORNIA, OR•ANY OF ITS POLITICAL SUBDIVISIONS AND
NEITHER THE CITY OF HUNTINGTON BEACH, THE COUNTY OF ORANGE,
THE STATE OF CALIFORNIA, NOR ANY OF ITS POLITICAL
SUBDIVISIONS IS LIABLE ON THEM, NOR IN ANY EVENT SHALL THE
PAYMENT OBLIGATIONS OF THE AGENCY UNDER THE CREDIT AGREEMENT
BE PAYABLE OUT OF ANY FUNDS AND PROPERTIES OTHER THAN THOSE
OF THE AGENCY.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF CALIFORNIA.
THE REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
By:
Name:
Title:
A-2
C C C
NOTE SCHEDULE
Date of Loan
or Advance
Amount of Loan
or Advance
Type of Loan
Date and Amount
of Interest Paid
Date and Amount
of Principal Paid
A-3
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[FORM OF]
NOTICE OF BORROWING
Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, New York 10260-0060
Attention: Loan Department
Gentlemen:
EXHIBIT B
[Date]
The undersigned, an authorized officer of The
Redevelopment Agency of the City of Huntington Beach (the
"Agency"), refers to the Credit Agreement, dated as of May
—, 1992 (as amended from time to time, the "Credit
Agreement," the terms defined therein being used herein as
therein defined), between the Agency and you, and hereby
gives you notice, irrevocably, pursuant to Section 2.02 of
the Credit Agreement, that the Agency hereby requests a
Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to
such Borrowing (the "Proposed Borrowing") as required by
Section 2.02 of the Credit Agreement:
(1) the Business Day of the Proposed Borrowing is
, 1992;
(2) the Proposed Borrowing is to consist of a
[Base Rate Loan] [Euro-Dollar Loan] (delete as
applicable);
(3) the principal anount of the Proposed
Borrowing is $ ;
[(4) the Interest Period for the Proposed
Borrowing is (1] [2] (3] f4] [5] (delete as
applicable) months; and]`!
/ To be included for a Proposed Borrowing of a Euro-Dollar
Loan.
B-1
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[(5) the Proposed Borrowing will consist of a
Refunding Loan and the Loan or Money Market Advance
being repaid was made to the Agency on ,
1992.] I
The undersigned hereby certifies on behalf of the
Agency that the following statements are true on the date
hereof, and will be true on the date of the Proposed
Borrowing:
(A) the representations and warranties contained
in Article V of the Credit Agreement are correct,
before and after giving effect to the Proposed
Borrowing and to the application of the proceeds
thereof, as though made on and as of such date; and
(b) no Default or Event of Default has occurred
and is continuing, or would result from such Proposed
Borrowing or from the application of the proceeds
thereof.
Very truly yours,
THE REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
By.
Name:
Title:
=./ To be included if the Proposed Borrowing is a Refunding
Loan.
B-2
) HIBIT C
(FORM OF OPINION OF COUNSEL TO THE AGENCY]
May 1992
Morgan Guaranty Trust
Company of New York
60 Wall Street
New York, New York 10260
Re: Credit Agreement, dated as of
May _, 1992, between Morgan
Guaranty Trust Company of New York
and The Redevelopment Agency of
the City of ,Huntington Beach_„`
Ladies and Gentlemen:
We have acted as counsel to The Redevelopment
Agency of the City of Huntington Beach (the "Agency"). We
are familiar with the matters relating to the preparation,
execution and delivery of a Credit Agreement, dated as of
May _, 1992 (the "Credit Agreement"), between the Agency
and you (the "Bank"). Terms defined in the Credit
Agreement are used herein as therein defined. Among other
things, we have examined:
(1) the Agency's fully executed counterpart of the
Credit Agreement, including all Exhibits and
Schedules attached thereto; and
(2) the by-laws of the Agency as now in effect (the
"By-laws").
We have also examined the originals, or copies
certified to our satisfaction, of (i) such other corporate
records of the Agency, certificates of public officials and
of officers of the Agency, (ii) the agreements, instruments
and documents which affect or purport to affect the
obligations of the Agency under the Credit Agreement, and
(iii) such other agreements, instruments and documents as
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C-1
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Morgan Guaranty Trust Company of New York
May , 1992
we have deemed necessary as a basis for the opinions
hereinafter expressed. we have assumed the due execution
and delivery of the Credit Agreement by the Bank.
Based upon the foregoing and upon such
investigation as we have deemed necessary, we are of the
opinion that:
1. The Agency is a redevelopment agency duly
organized and validly existing under the laws of
the State of California and has the power to own
its properties and to carry on its affairs as now
being conducted.
2. The execution, delivery and performance by the
Agency of the Credit Agreement and the Note is
within the Agency's powers, have each been duly
authorized by necessary governmental action, (i)
do not contravene or violate (A) any provision of
any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award
presently in effect and having applicability to
the Agency, (B) any instrument or contractual
restriction binding on or affecting the Agency,
or (C) any provision of the resolution pursuant
to which the Agency was created or the Agency's
by-laws, (ii) will not result in a breach of any
instrument or contractual obligation binding on
or affecting the Agency, and (ii) to the best of
my knowledge, will not result in, or require, the
creation or imposition of any lien upon or with
respect to any other properties now owned or
hereafter acquired by the Agency.
3. No further authorization, consent or approval or
other action by, and no further notice to or
filing or registration with, any governmental
authority, regulatory body or court is required
for the due execution, delivery and performance
by the Agency of the Credit Agreement and the
Note.
4. Each of the Credit Agreement and the Note has
been duly executed and delivered by the Agency
and is the legal, valid and binding obligation of
the Agency enforceable against the Agency in
C-2
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Morgan Guaranty Trust Company of New York
May , 1992
accordance with its terms (except with respect to
any indemnification provisions, as to which we
express no opinion).
5. There is no pending, or to the best of our
knowledge after due inquiry, threatened action,
suit, investigation or proceeding against or
affecting the Agency before any court,
governmental agency or arbitrator which may
materially adversely affect the ability of the
Agency to perform its obligations under the
Credit Agreement or the Note which purports to
affect the legality, validity or enforceability
of the Credit Agreement or the Note.
6. The Agency is authorized to pledge, and pursuant
to the Credit Agreement has validly pledged, to
the Bank the Available Tax Revenues as security
for the payment and performance of the Agency's
obligations to the Bank under the Credit
Agreement. Such pledge is a valid and binding
obligation of the Agency enforceable against the
Agency and its successors and assigns. The
Bank's security interest in the Available Tax
Revenues is not subject to any lien with a right
of payment senior to the Agency's obligations to
the Bank under the Credit Agreement with the
exception of the Senior Loan.
7. The Agency does not enjoy any rights of immunity
on the grounds of sovereign immunity in respect
of its obligations under the Credit Agreement or
Note.
The opinions set forth above are subject to the following
qualifications:
(a) The enforceability of the Agency's obligations
under the Credit Agreement and Note are subject
to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally.
(b) The enforceability of the Agency's obligations
under the Credit Agreement and Note may be
subiect to general principles of euuity
C-3
Morgan Guaranty Trust Company of New York
May , 1992
(regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) lie are members of the State Bar of California and
accordingly do not purport to be experts on, or
to be qualified to express any opinion herein
concerning, nor do we express any opinions herein
concerning any law other than the federal laws of
the United States of America and the laws of the
State of California, excluding however, federal
or state Securities and banking law.
This opinion is furnished to you pursuant to your
request and is for your benefit only and may not be relied
upon by any other person or delivered to any other person
without our prior written consent.
Very truly yours,
C-4
k4.1i
EXHIBIT D
THE REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
OFFYCERIS CERTIFICATE
I, the undersigned, of
The Redevelopment Agency of the City of Huntington Beach, a
redevelopment agency created, established and authorized to
transact business and exercise its powers under the laws of
the State of California (the "Agency"), DO HEREBY CERTIFY
that:
1. This Certificate is furnished pursuant to
Section 4.01(f) of the Credit Agreement, dated as of May ^,
1992, by and between the Agency and Morgan Guaranty Trust
Company of New York (such Credit Agreement, as in effect on
the date of this Certificate, being herein called the "Credit
Agreement"). Unless otherwise defined herein capitalized
terms used in this Certificate shall have the meanings
assigned to those terms in the Credit Agreement.
2. Attached hereto as Exhibit A is a true and
correct copy of the resolutions duly adopted by the Agency at
a meeting on , 1992, authorizing the execution,
delivery and performance by the Agency of the Credit
Agreement and the Note, which resolutions have not been
revoked, modified, amended or rescinded and are still in full
force and effect.
3. Attached hereto as Exhibit B is a true and
correct copy of the resolution of the City of Huntington
Beach establishing the Agency, together with all
modifications and amendments to such resolution through the
date hereof.
4. Attached hereto as Exhibit C is a true and
correct copy of Resolution No. 1 of the Agency, dated March
11 1976, setting forth the law and authority under which the
Agency operates, together with all modifications and
amendments thereof through the date hereof and all documents
referenced therein.
S. is the duly appointed
Executive Director of the Agency and has held such office
D-1
since The signature set forth below Is
name is his genuine signature.
ane Office Signature
Executive Director
6. On the date hereof, the representations and
warranties contained in Article V of the Credit Agreement are
true and correct.
7. On the date hereof, no Default or Event of
Default has occurred or is continuing or would result from
the execution and delivery by the Agency of the Credit
Agreement or the Note or the making of Loans or Money Market
Advances thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand
this day of , 1992.
THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTIIIGTON BEACH
Name:
Title:
D-2
STRAIDLING, YOCCA, CARLSON & RAU'TH
FRITZ R. STRAOLINO
STEPMEN M. LACOUNT
A PROFESSIONA— CORPORATION
N.C. [. TOCGA
HARLET L. UJELLANO
ATTORNEYS AT LAW
C. CRAIO CARLSON
STEPHEN T. FREEMAN
wILLIAM R. RAUTM III
ROBERT A. WILSOM
660 NEWPORT CENTA.R DRIVE. SUITE ISOO
K.C. SCMA^F
CNER'+L A. DOW
FUCHARO C. DOOOM^M
NICNOLAS J. TOCCA
POST OKFICE BOX 7660
J0M1. J. MURPHT
JULIE M. PORTER
TMOMAZ A CLARK, JR.
M^R. T. PALM
NEWPORT /EACH, CALIFORNIA 92660.6441
BEN A. FRTOMAI.
MICMAEL E. FLTNN
DAV'O R. M•AwEN
ROSERT C. FVNSTEN
TELEPHONE )714) 725•4000
PAWL L DALE
ALETA LOWISE BRUNT
RVOOLPH C. SMEPARO
ROM^LO A. VAN SLARCOM
TEL(714) 640-7035
TELEPHONE
ROBERT 10. BANE
STEPMEN M. M•NAMARA
M.D. TALBOT
OART A. PEMRERfON
FAX NVMSER
BRUCE C. SruART
CAROL L. LEW
(71A) 7><S•AICO
E..URT TEAOER
OENISE HARSAVO« "ZWNO
ROBERT.l. WMALEN
B.ARBARA ZEID LEIBOLO
ROBERT G RICH
JON E. OOETZ
TMO.IAS A. PISTON(
ALAN J. RESSEL
RAM0ALL J. BMERMAM
OARV PL DOWNS
BRUCE w. FEUCMTER
JOMM D. IRELAND
MAR. J. HUESSCM
MICMAEL J. PENDEROAST
RAMEN A. ALLIS
DAVID H. MANN
ELI;ABETN C. OREE1.
CMIhBTOPMER M. MOIIOPOULDB May 13, 1992
BRUCE O. MAT
DANA M. REZMON
DONALD J. MAMMAN
DARRTL S. OISSON
JOHN J. SWIOART. JR.
JONI. M .MCLENOON
MICMAEL A. ZABLOCRI
TOO" R. TMAA^R
NEILA R. BERPISTEIN
R/CHARO T. NEEDMAM
CELESTE STAML BRADT
ROBE FIT C. WALLACE
CMR STOPMER J. KILPATRICK
DAMON C. MOSLER
JOEI,M. OWTM
OERARD L. 09RA14
4VI61C .PCOT AXING
JOHN F. CANNON
OAWM C. NO M ATWELL
JOMN E. WOOOMEAO IV
OWEN 0. LUSOW
OOu6LAS R FEIC.
LAWREHCL B. CON"
WILLIAM J. MORLAT
Connie Brockway, City Clerk
City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
Dear Connie:
JOHN A. B1IECREI111106[
RCN^ C. STONE
O. COUN•aL
W*ITCWS OIRECT VIAL'
(714) 725-4185
As we discussed today, I am sending you the six execution
copies of the Credit Agreement I received which have now been
redated as of May. Please insert the signed page 30 of the old
"April" Credit Agreement copies into these new copies of the
Agreements.
I am also sending to you a new "Note" likewise redated to
the month of May, which will replace the former Note dated as
of April.
If you have any questions, please do not hesitate to call
me at the above number.
Very truly yours,
STRADL N , YOCCA,
Joh G. McClendon
JGM/nkc
0337m/83/2460-57
Enclosures
cc: Thomas P. Clark, Jr., Esq.
Arthur De La Loza, Esq.
CARLSON & RAUTH
FOURTH AMENDMENT
TO DISPOSITION AND DEVELOPMENT AGREEMENT
By and Among THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH,
ROBERT L. MAYER, as Trustee of the
Robert L. Mayer Trust of 1982,
dated June 22, 1982, as amended, and
WATERFRONT CONSTRUCTION NO. 1
a California limited partnership
THIS FOURTH AMENDMENT TO DISPOSITION AND DEVELOPMENT
AGREEMENT (the "Fourth Amendment") is entered into this
day of April, 1992, by and among the REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH (the "Agency"), ROBERT L. MAYER,
as Trustee of the Robert L. Mayer Trust of 1982, dated June 22,
1982, as amended ("Developer"), and WATERFRONT CONSTRUCTION
NO. 1, a California limited partnership ("Waterfront")
(collectively, the "Parties").
A. On or about August 15, 1988, the Agency and Developer
entered into a Disposition and Development Agreement (the
"Original DDA").
B. On or about April 10, 1989, Developer, Waterfront, and
certain affiliated entities entered into an Assignment and
Assumption Agreement pursuant to which Developer assigned to
Waterfront and Waterfront assumed (through a series of
assignments to the affiliated entities) all of Developer's
right, title, and interest in and to that portion of the "Site"
described in the Original DDA as "Separate Development Parcel
No. l."
C. On or about June 17, 1991, the Agency and Developer
entered into a First Amendment to Disposition and Development
Agreement (the "First Amendment"). Waterfront has executed a
document consenting to the First Amendment. On or about
August 1, 1991, the Agency, Developer, and Waterfront entered
into a Second Amendment to Disposition and Development
Agreement (the "Second Amendment").
D. On or about March 16, 1992, the Agency, Developer, and
Waterfront entered into a Third Amendment to Disposition and
Development Agreement (the "Third Amendment").
E. Pursuant to Section 7(i) of the Third Amendment,
Waterfront covenanted to pay the proceeds of the 1992 Revenue
Bonds (as defined in the Third Amendment) to Dai-Ichi Kangyo
Bank, a portion of which is for the purpose of settlement of
litigation and claims arising out of the construction of the
04-16-92
0371Q/2460-57 - 2 -
Waterfront Hilton, thereby facilitating the restructuring and
satisfaction of certain financial commitments among the
Parties.
F. It has now been determined by the Parties that the
actual settlement of the litigation set forth in Section 7(i)
of the Third Amendment is not essential for restructuring of
the various financial obligations among the Parties as provided
for in the Third Amendment in that Chicago Title Company will,
upon the deposit into escrow account number 98-622525-4 of the
sum of not less than $1,526,000 (the "Escrow Account) issue an.
ALTA extended coverage policy (together with CLTA endorsements)
assuring the priority of the Agency's fee simple interest in
Separate Development Parcel No. 1 (the "Policy") and the
priority of the lien of Dai-Ichi Kangyo Bank's loan.
G. The Parties now desire to provide for the
implementation of the Third Amendment as set forth below.
The Parties hereby agree to amend the Third Amendment as
follows:
SCTICN�1. The parties hereby agree that the net
proceeds of the 1992 Revenue Bonds should be $4,300,000.
04-16-92
03710/2460-57 - 3 -
f
SECTION 21. As an alternative to the "Settlement of
litigation and claims arising out of construction of the
Waterfront Hilton" as provided in Section 7(1) of the Third
Amendment, the Agency shall permit Waterfront to pay to
Dai--Ichi Kangyo Bank a portion of the net proceeds of the
1992 Revenue Bonds for the purpose of depositing those
proceeds into the Escrow Account in an amount sufficient to
cause Chicago Title Company to issue the Policy. The
Policy shall not list any of the litigation set forth in
Section 7(1) of the Third Amendment as Exceptions and
Exclusions and must assure the validity of the Agency's fee.
simple interest in Separate Development Parcel No. 1 to the
satisfaction of the Agency Executive Director and the City
Attorney in their sole and absolute discretion.
69 CT,QN-3. Developer and Waterfront hereby agree to
defend, indemnify and hold Agency and City of Huntington
Beach harmless with respect to any claim or cause of action
arising out of the construction of the Waterfront Hilton
("Construction Litigation"). -,In addition, Developer and
Waterfront hereby covenant to pay any final judgment with
respect to the Construction Litigation in excess of the
Escrow Amount within 60 days after entry of such final
judgment. In the event the final judgment in the
Construction Litigation is less than the Escrow Amount, the
difference shall be deposited with Dai-Ichi Kangyo Bank for
disbursement in accordance with the Credit Agreement.
04-16-92
0371Q/2460-57 - 4 -
SECTION 4. Except as provided herein, the Original DDA,
First Amendment, Second Amendment and Third Amendment shall
remain in effect in accordance with their respective terms,
conditions -and covenants.
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
By.. 4
-EWairman "
ATTEST:
01
Agency Secretary eMA41
APPROVED AS TO F RM: D
C�
gency Special Counsel Deputy City
REVIEWED AND APPROVED
AS TO FORM:
City,Atto
:w It
APPROVED:
inistra r
ROBERT L. MAYER, as Trustee of
the ROBERT L. MAYER TRUST OF
19B2, dated June 22, 1982, as
amended
By:�-
RO ERT L. MAYER
[SIGNATURES CONTINUED ON PAGE 61
04-16-92
03710/2460-57 - 5 -
WATERFRONT CONSTRUCTION NO. 1,
a California limited partnership
By: The Waterfront, Inc., a
California corporation
General Partner
By:
Robert L. May
Chairman of the 7oard
and Chief Financial
Officer
8y: � `�•
Stephen K. Bone
President
The forego:na instrument is.a correct copy 1i
the criginat on fife in this office. '
A:test . .. ....................
uv
Ci Cler% and E�COfficio Clcrk bf tho city,
Council of the City of Huntington Beach,
04-16-92
0371Q/2460-57 6 -
le,
MARKED TO SHOW
CHA14GES F OM DRAFT
DATED 3 z L
[WSC Draft/L-4/8/92]
4, 750, ccv --,--,7 t 4, 390, 4`-0
CREDIT AGREEMENT
between the
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
and
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
Dated as of April 15, 1992
F- i
• • ,Y
ARTICLE I
DEFINED TERMS; INTERPRETATION
Section 1.01. Definitions . . . . . . . . . . . . 1
Section 1.02. Interpretation . . . . . . . . . . 7
ARTICLE II
THE FACILITIES
Section
2.01.
Loan Facility . . . . . . . . . .
.
7
Section
2.02.
Notice of Borrowing; Disbursement
of Funds . . . . . . . . . . . .
.
7
Section
2.03.
Money Market Advance Facility . .
.
8
Section
2.04.
Refunding Loans . . . . . . . . .
.
9
Section
2.05.
Promissory Note . . . . . . . . .
.
10
Section
2.06.
Security for Payments; Further
Assurance . . . . . . . . . . . .
.
10
Section'2.07.
Interest; Interest Periods . . .
.
10
Section
2.08.
Termination or Reduction of
Commitment . . . . . . . . . . .
.
11
Section
2.09.
Optional Prepayments . . . . . .
.
11
Section
2.10.
Mandatory Prepayment . . . . . .
.
12
Section
2.21.
General Provisions as to Payments
.
13
Section
2.12.
Computation of Interest and Fees
.
13
Section
2.23.
Funding Losses . . . . . . . . .
.
13
ARTICLE III
CHANGES IN CIRCUMSTANCES AFFECTING THE LOANS
Section 3.01. Increased Cost of Maintaining the
Commitment and Reduced Return . . . 14
Section 3.02. Basis for Determining Interest Rate
Unavailable . . . . . . . . . . . . 16
Section 3.03. Illegality . . . . . . . . . . . . 16
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Effectiveness . . . . . . . . . . . 16
Section 4.02. Loans and Money Market Advances . . 18
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. Due Creation . . . . . . . . . 18
Section 5.02. Due Authorization; No Violation; No
Default . . . . . . . . . . . . . . 19
Section 5.03. Approvals . . . . . . . . . . . . . 19
i
M T-7m-
Section
5.04..
Enforceability . . . . . . . . . .
19
Section
5.05.
Litigation . . . . . . . . . . . .
19
Section
5.06.
Disclosure . . . . . . . . . . . .
20
Section
5.07.
No Sovereign Immunity . . . . . . .
20
Section
5.08.
Pledged Revenues . . . . . . . . .
20
Section
5.09.
No ERISA Plans . . . . . . . . . .
20
Section
5.10.
Environmental Matters . . . . . . .
20
ARTICLE VI
COVENANTS
Section
6.01.
Compliance with Laws . . . . . . .
21
Section
6.02.
Agency to Maintain Existence . . .
21
Section
6.03.
Notice of Default . . . . . . . . .
21
Section
6.04.
Further Assurances . . . . . . . .
21
Section
6.05.
Books and Records; Financial
Statements . . . . . . . . . . . .
22
Section
6.06.
Inspection . . . . . . . . . . . .
22
Section
6.07.
No ERISA Plans . . . . . . . . . .
22
Section
6.08.
Limitation on Indebtedness . . . .
22
Section
6.09.
Use of Proceeds .
22
Section
6.10.
Payment of Loans and Money Market
Advances . . . . . . . . . . . . .
22
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
Section 7.01. Events of Default; Remedies . . . . 23
Section 7.02. Exercise of Rights . . . . . . . . 25
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Notices . . . . . . . . . . . . . . 25
Section
8.02.
Amendment and Waivers . . . . . . .
26
Section
8.03.
Successors and Assigns . . . . . .
26
Section
8.04.
Expenses; Documentary Taxes;
Indemnification . . . . . . . . . .
27
Section
8.05.
Headings; Table of Contents . . . .
28
Section
8.06.
Severability of Provisions . . . .
28
Section
8.07.
Counterparts; Integration . . . . .
28
Section
8.08.
Governing Law and Jurisdiction . .
28
Section
8.09.
Waiver of Jury Trial . . . . . . .
29
Section
8.10.
No Third Party Beneficiaries . . .
29
ii
SCHEDULES
SCHEDULE 1 - Estimation of Tax Revenue Surplus
For Fiscal Year 1991-92
SCHEDULE 2 - Projection of Tax Increment Revenues For Fiscal
Years 1991-92, 1992-93, 1993-94, 1994-95 and
2995-96
EXHIBITS
EXHIBIT
A -
Form
of Note
EXHIBIT
B -
Form
of Notice of Borrowing
EXHIBIT
C -
Form
Opinion of Counsel to the Agency
EXHIBIT
D
- Form
of Secretary's Certificate
iii
This CREDIT AGREEMENT, dated as of April 15, 1992
(together with all amendments, modifications and supplements,
this "Agreement"), is entered into by and between the
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a
redevelopment agency created, established and authorized to
transact business and exercise its powers, all under and
pursuant to the Community Redevelopment Law (Part 1 of
Division 24 of the Health and Safety Code of the State of
California) (the "Agency"), and MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, a New York banking corporation (the "Bank").
HITNEEILTH:
WHEREAS, the Agency has requested the Bank to make
available to the Agency a short-term loan facility;
WHEREAS, the Agency intends to repay any loans made
hereunder at the time at which it next issues bonds, notes or
other evidences of indebtedness; and
WHEREAS, subject to and upon the terms and
conditions herein set forth, the Bank is willing to make
available the credit facility provided for herein;
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
DEFINED TERMS; INTERPRETATION
Section 1.01. Definitions. As used in this
Agreement, the following terms shall have the respective
meanings set forth below:
"Adjusted London Interbank Offered. ate" means, with
respect to any Interest Period, a rate per annum equal to the
quotient obtained (rounded upwards, if necessary, to the next
higher 1/100 of 1%) by dividing (a) the applicable London
Interbank Offered Rate by (b) 2.00 minus the Euro-Dollar
Reserve Percentage, if any.
"Acrencv" has the meaning set forth in the
introductory paragraph of this Agreement.
"agreement" has the meaning set forth in the
introductory paragraph of this Agreement.
"Assignee" has the meaning set forth in Section
8.03(b) of this Agreement.
"Available Tax Revenues" means the Tax Revenues less
the amount of Tax Revenues required to pay interest and
principal on and reserve account requirements relating to the
senior Loan.
"Bank" has the meaning set forth in the introductory
paragraph of this Agreement.
"Bankruptcy Code" has the meaning set forth in
Section 7.01(e).
"Base Rate" means, for any day, a rate per annum
equal to the higher of (a) the Prime Rate for such day and (b)
the sum of 1/2 of 1t plus the Federal Funds Rate for such day.
"Base Rate Loan" means a Loan designated as such in
a Notice of Borrowing delivered by the Agency to the Bank and
any Loan that bears interest at the Base Rate.
"Borrowing" means the borrowing of a Loan or Loans
on a given date and the borrowing of a Money Market Advance or
Money Market Advances on a given date.
"Breakaag Coptsn means any loss ex ense or
liability incurred by the Bank in connection with obtaining,
iqui ating or employing deposits from third parties as a
result of the Agency's failure to borrow Euro-Dollar Loans or
Money Market Advances after notice has been given to the Bank
in accordance with Sect on 2.02 is ) or Section _2 ,03= or as a
result of the prepayment or payment of Euro-Dollar Loans or
Money Market Advances on a day other than the last day of an
Interest Period. Such loss, expense or liability shall
include, without limitation, an amount equal to the excess, if
any, as reasonably determined by the Bank, of (i) its cost of
obtaining the funds for the Euro-Dollar Loans or Money Market
Advances being paid, prepaid or not borrowed for the period
from the date of such payment, prepayment or failure to borrow
to the last day of the Interest Period for such Euro-Dollar
Loans or Money Market Advances (or, in the case of a failure
to borrow, the Interest Period for such Euro-Dollar Loans or
Money Market Advances which would have commenced on the date
of such failure to borrow) over (ii) the amount of interest
(as reasonably determined by the Bank) that would be realized
by the Bank in reemploying the funds so paid, prepaid or not
borrowed for such period or Interest Period, as the case may
be.
"Business Day" means a day which is not a Saturday,
Sunday or legal holiday on which banking institutions in the
State of California or the City of New York are authorized to
remain closed.
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute thereto.
"Commitment" means the obligation of the Bank to
lend the amount set forth in Section 2.01 hereof, as such
amount may be reduced from time to time pursuant to Section
2.08.
"Default" means any condition or event which, with
the giving of notice or lapse of time or both would, unless
cured or waived, become an Event of Default.
"pollirs" and the sign "I" means lawful money of the
United States of America.
"Domestic Lending of f Igg" means the principal office
of the Bank located at 60 Wall Street, New York, New York
10260, or such other branch (or affiliate) as the Bank may
hereafter designate as its Domestic Lending Office.
"Effective _Date" means the date on which this
Agreement becomes effective pursuant to Section 4.01.
"Environmental Laws" means any and all federal,
state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to
emissions, discharges or releases of pollutants, contaminants,
petroleum or petroleum products, chemicals or industrial,
toxic or hazardous substances or wastes into the environment,
including, without limitation, ambient air, surface water,
ground water, or land or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or other handling of pollutants,
contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the
clean-up or other remediation thereof.
"$" means the Employee Retirement Income Secu-
rity Act of 1974, as amended, and any successor statute
thereto.
"Euro-Dollar,_Busingss_Dav" means any Business Day on
which commercial banks are open for international business
(including dealings in Dollar deposits) in London.
",Eur,Q-Dollar Lending Office" means the office of the
Bank located at Nassau, Bahamas or such other branch (or
affiliate) of the Bank as the Bank may hereafter designate as
its Euro-Dollar Lending Office.
3
"Euro-Dollar Loan" means a Loan designated as such
in a Notice of Borrowing delivered by the Agency to the Bank.
"Egr2-Dollar Reserve PerceStagg" means for any day
that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the
maximum reserve requirements for a member of the Federal
Reserve System in New York City with deposits exceeding five
billion Dollars in respect of "Eurocurrency liabilities" (or
in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Euro-
Dollar Loans is determined or any category of extensions of
credit or other assets which includes loans by a non -United
States office of the Bank to United States residents). The
Adjusted London Interbank offered Rate shall be adjusted
automatically on and as of the effective date of any changes
in the Euro-Dollar Reserve Percentage.
"Zvent of Default" has the meaning set forth in
Section 7.01.
"Expiry Date" means September 30, 1992.
" ederol Funds Rate" means, for any day, the rate
per annum. (rounded upwards, if necessary, to the nearest 1/100
of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day; provided that (a) if
such day is not a Business Day, the Federal Funds Rate for
such day shall be the rate on such transactions on the next
preceding Business Day as so published on the next succeeding
Business Day, and (b) if no rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to the Bank on such day on
such transactions as determined by the Bank.
"Intergst Period" means with respect to each (a)
Euro-Dollar Loan, at the option of the Agency, the period
commencing on the date of such Loan and ending 1, 2, 3 4 or
5 months thereafter, (b) Money Market Advance, at the on
of the Agency, the period commencing on the date of such Loan
and ending no sooner than 7 days thereafter and no longer than
168 days thereafter and (c) Base Rate Loan, the period
commencing on the date of such Low and ending 30 days
thereafter or, if the Expiry Date is less than 30 days after
the incurrence of such Base Rate Loan, on the Expiry Date;
provided that: (i) in the case of Euro-Dollar Loans, any
Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next
4
succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Euro-
Dollar Business Day, (ii) in the case of Euro-Dollar Loans,
any Interest Period which begins on the last Euro-Dollar
Business Day of the calendar month (or on a day for which
there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the
last Euro-Dollar Business Day of a calendar month, (iii) in
the case of Money Market Advances, any Interest Period which
would otherwise end on a day which is not a Business Day shall
be extended to the next succeeding Business Day and (iv) no
Interest Period shall extend beyond the Expiry Date.
"LAW" means Division 24 of the California Health and
Safety Code and Article 11 of Chapter 3 of Division 2 of
Title 5 of the California Government Code.
"Loan" has the meaning set forth in Section 2.01.
"London Interbank Offered,Rate" means, with respect
to any Interest Period, the rate per annum at which deposits
in Dollars are offered to the Bank in the London interbank
market at approximately 11:00 a.m. (London time) two Euro-
Dollar Business Days prior to the first day of such Interest
Period in an amount approximately equal to the principal
amount of the Euro-Dollar Loan to which such Interest Period
is to apply and for a period of time comparable to such
Interest Period.
" e a e dv " has the meaning set forth in
Section 2.03(a).
"Note" has the meaning set forth in Section 2.05.
"Notice of Borrowing" has the weaning set forth in
Section 2.02(a).
"Parent" means, with respect to the Bank, any person
controlling the Bank.
"Participant" has the meaning set forth in Section
8.03(b).
"Prime, Rate" means the rate of interest publicly
announced by the Bank in New York City from time to time as
its "prime rate," any change in the interest rate resulting
from a change in the Prime Rate to be effective on the date of
each change in the prime rate announced by the Bank. The
Prime Rate is a reference rate only, and the Bank may make
loans from time to time at interest rates above, equal to or
below the Prime Rate.
5
"Project" means the undertaking of the Agency
pursuant to the Redevelopment Plans and the Law for the
redevelopment of the Project Area.
"Project Area" means the Main Pier Project Area
described in the Redevelopment Plans.
"Redevelopment _ Plans" means the Main Pier
Redevelopment Plan approved and adopted by ordinance No. 2578,
adopted by the City Council of the City of Huntington Beach on
September 20, 2982, as amended pursuant to Ordinance No. 2634,
adopted September 6, 1983, together with any other amendments
thereof heretofore or hereafter duly authorized pursuant to
the Law.
"Refunding LOW means a Loan or Money Market
Advance which, after application of the proceeds thereof,
results in no net increase in the outstanding principal amount
of Loans and Money Market Advances made by the Bank.
"Senior_ Loan" means the loan nade by the Huntington
Beach Public Financing Authority (the "Authority") to the
Agency from the proceeds of the sale of the Agency's
Huntington Beach Redevelopment Projects 1988 Revenue Bonds,
Series A, pursuant to that certain Loan Agreement, dated as of
May 10, 1988, among the Agency, First Interstate Bank of
California and the Authority.
"Tax Revenues" means (a) that portion of taxes from
the Project Area received by the Agency, which is allocated to
and paid into a special fund of the Agency pursuant to Article
6 of Chapter 6 of Division 24 of the California Health and
Safety Code and Section 16 of Article XVI of the Constitution
o the State of California and (b) reimbursements,
subventions, including payments to the Agency with respect to
personal property within the Project pursuant to Section 16110
et seq. of the California Government Code, or other payments
made by the State of California with respect to any property
taxes that would otherwise be due on real or personal property
but for an exemption of such from such taxes. Tax Revenues
shall not include (a) taxes allocated to the Agency that are
required by Section 33334.2 of the Law to be used by the
Agency for increasing and improving the supply of low and
moderate income housing except to the extent such amounts are
permitted under the Law to be applied to pay debt service on
the Loans and Money Market Advances and (b) amounts payable by
the Agency under agreements entered into pursuant to Sect ons
33401 and 33445 of the California Health and Safety Cod
�1
Section 1.02. I.nterpretntion. In this Agreement,
the singular includes the plural and the plural the singular;
words importing any gender include the other genders;
references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the
statute referred to; references to agreements and other
contractual instruments shall be deemed to include all
subsequent amendments and other modifications to such in-
struments, but only to the extent such amendments and other
modifications are not prohibited by the terms of this Agree-
ment; and references to persons includes their respective
permitted successors and assigns; references to "Articles",
"Exhibits", "Sections", and other subdivisions are to the
designated Articles, Exhibits, Sections, and other
subdivisions of this Agreement; and references to the words
"hereof", "herein", "hereunder" and "herewith" refer to this
Agreement as a whole and not to any particular Article,
Section, or other subdivision.
ARTICLE II
THE FACILITIES
Section 2.01. Loan Facility. Subject to and upon
the terms and conditions set forth in this Agreement, the Bank
agrees to make loans (individually, a "Loan" and collectively,
the "Loans") to the Agency from time to time prior to the
Expiry Date in amounts (less the principal amount of any Money
Market Advances made by the Bank pursuant to Section 2.03) not
ex eeding in the aggregate at any one time outstanding
$4 350,000 (the "Commitment"). Each Loan under this Section
2.01 shall be in the minimum principal amount of $500,000 or
$100,000 multiples in excess thereof and shall bear interest
as provided in Section 2.07. The Agency may prepay Loans as
provided in Section 2.09 and shall prepay the Loans as
provided in Section 2.10. Loans once prepaid may not be
reborrowed. Except as provided in Section 2.04, Loans once
repaid may not be reborrowed. All Loans shall mature and be
payable in full on the last day of the Interest Period
applicable thereto. The unutilized portion of the Commitment
available to make Loans shall be reduced by the principal
amount of all Loans (other than Refunding Loans) and Money
Market Advances made by the Bank.
Section 2.02. Notice of Borrowing; Disbursement of
Funds.
(a) whenever the Agency desires to make a Borrowing
of Loans hereunder it shall give the Bank written notice
substantially in the form attached hereto as Exhibit B (each
such notice, a "Notice of Borrowing"), not later than 11:00
a.m. (New York City time) on (i) the date of each Base Rate
7
Loan and (ii) the third Euro-Dollar Business Day before each
Euro-Dollar Loan, specifying: (A) the date of such Loan,
which shall be a Business Day in the case of a Base Rate Loan
and a Euro-Dollar Business Day in the case of a Euro-Dollar
Loan, (B) whether such Loan is to be a Base Rate Loan or a
Euro-Dollar Loan, (C) the principal amount of such Loan, (D)
in the case of a Euro-Dollar Loan, the duration of the
Interest Period applicable thereto (subject to the definition
of Interest Period), (E) whether such Loan is a Refunding
Loan, and (F) in the case of a Refunding Loan, the identity of
the Loan or Money Market Advance that is being repaid.
(b) Unless a Loan is &•Refunding Loan, no later than
2:00 p.m. (New York City time) on the date specified in each
Notice of Borrowing, the Bank will make the proceeds thereof
available in Dollars in immediately available funds at the
Bank's Domestic Lending Office. In the case of a Refunding
Loan, the proceeds thereof shall be applied to repay the Loan
or Money Market Advance identified by the Agency as the Loan
or Money Market Advance being repaid in the Notice of
Borrowing with respect to such Refunding Loan.
Section 2.03. Monev.Market Advance Facilitv.
(a) In addition to the commitment of the Bank to
make Loans pursuant to Section 2.01, the Agency may, as set
forth in this Section, request the Bank to make offers to make
roney market loans (such loans, "Money Market Advances") to
the Agency. The Bank may, but shall have no obligation to,
make such offers and the Agency may, but shall have no
obligation to, accept such offers in the manner set forth in
this Section.
(b) Whenever the Agency wishes to request offers
from the Bank to make Money Market Advances under this
Section, it shall transmit to the Bank by telephone (promptly
confirmed in writing) to the Credit Administration, attention
Gerald M. Corso (telephone number (212) 648-6812)) a request
so as to be received no later than 11:00 a.m. (New York City
time) on the proposed date of Borrowing. Such request shall
specify: (i) the proposed date of Borrowing, which shall be a
Business Day, (fi) the principal amount of such Borrowing,
which shall not exceed the unutilized portion of the
Commitment then available, (iii) the duration of the Interest
Period desired which shall not extend beyond the Expiry Date.
The Agency may request offers to make Money Market Advances
for more than one Interest Period.
(c) Upon receipt of telephonic notice from the
Agency pursuant to the preceding paragraph, the Bank may
submit to the Agency by telephone (promptly confirmed in
writing) an offer or offers to make Money Market Advances.
8
Each such response by the Bank shall specify: (i) the proposed
date of Borrowing, (ii) the principal amount of the Money
Market Advance for which such offer is being made, which
principal amount may not exceed the principal amount of Money
Market Advances for which offers were requested (but which may
be less), and (iii) the rate of interest per annum (rounded to
the nearest 1/100th of 1% and based on actual number of days
elapsed over a year of 360-days) offered for each such Money
Market Advance. Subject to Article III, each offer to make
Money Market Advances shall be irrevocable.
(d) If the Agency has received an offer to make a
Money Market Advance from the Bank, not later than 12:00 noon
(New York City time) on the date on which such offer is made,
the Agency shall notify the Bank by telephone (promptly
confirmed in writing) to the Credit Administration, attention
Gerald M. Corso (telephone number (212) 648-6812)) of its
acceptance or non -acceptance of such offer. If the Agency
fails to respond to the Bank by such time on such date, the
Agency shall be deemed to have rejected such offer. In the
case of acceptance, such notice shall specify whether such
Money Market Advance is a Refunding Loan and, if so, the
identity of the Loan or Money Market Advance that is being
repaid.
(e) Unless a Money Market Advance is a Refunding
Loan, no later than 2:00 p.m. (New York City time) on the
proposed date of Borrowing, the Bank will make the principal
amount of such Money Market Advance available in Dollars in
available funds at the Bank's Domestic Lending Office. In the
case of a Refunding Loan, the proceeds thereof shall be
applied to repay the Loan identified by the Agency as the Loan
being repaid.
(f ) Except as provided in Section 2.04 , Money Market
Advances once repaid may not be reborrowed. Each Money Market
Advance shall mature and be payable on the last day of the
Interest Period related thereto.
Section 2.04. Refunding Loans. The Agency may
elect to repay a maturing Loan or maturing Money Market
Advance by incurring a Refunding Loan on the last day of the
interest Period with respect to such maturing Loan or maturing
Money Market Advance. The Agency shall comply with the
provisions of Section 2.02 if it desires to incur a Refunding
Loan that is a Euro-Dollar Rate Loan or a Base Rate Loan.
The Agency shall comply with the provisions of Section 2.03 if
it desires to incur a Refunding Loan that is a Money Market
Rate Loan. The aggregate principal amount of a Refunding Loan
shall not exceed the aggregate principal amount of the Loans
or Money Market Advances that are being repaid with the
proceeds of such Refunding Loan.
4
Section 2.05. Promissory 11ote. The Agency's
obligations to pay the principal of, and interest on, all
Loans and Money Market Advances made hereunder shall be
evidenced by a promissory note duly executed and delivered by
the Agency in substantially the form set forth herein as
Exhibit A with blanks appropriately completed in conformity
therewith (the "Note"). The Bank shall record the date, the
amount and the maturity of each Loan and Money Market Advance
made by it and the date and amount of each payment of
principal made by the Agency with respect thereto and, prior
to any assignment of the Note, shall endorse on the schedule
forming a part thereof appropriate notations to evidence the
foregoing; provided that the failure of the Bank to make any
such recordation or endorsement shall not affect the
obligations of the Agency hereunder or under the Note. The
Bank is hereby authorized by the Agency to so endorse the Note
and attach to and make a part of the Note a continuation of
any such schedule as and when required.
Section 2.06. Security_ for Payments; Further
Assurance.
(a) As security for the payment of the Loans, the
Money Market Advances and any other obligations of the Agency
hereunder, the Agency hereby pledges to the Bank and grants to
the Bank a security interest in accordance with Section
33641.5 of the California Health and_Safetv.Code, in, all of
its right, title and interest �in and to the Available Tax
Revenues, which pledge shall be perfected upon execution
hereof without physical delivery or further act.
(b) The Agency agrees that it will, from time to
time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, any and all financing
statements, if applicable, and all other further instruments
as may be required by law or as shall reasonably be requested
by the Bank for the perfection of the security interest
granted under this Section and for the preservation and
protection of all rights of the Bank under this Section.
Section 2.07. Interest; interest Periods.
(a) The Agency agrees to pay interest in respect of
the unpaid principal amount of each Loan from the date the
proceeds thereof are made available to the Agency until the
maturity thereof (whether by acceleration or otherwise) at a
rate per annum, which shall, (i) in the case of Euro-Dollar
Loans, during each Interest Period applicable thereto, be 1/2
of 1% in excess of the Adjusted London Interbank Offered Rate
for such Interest Period and (ii) in the case of Base Rate
Loans, be the Base Rate in effect during each day.
10
(b) The Agency agrees to pay interest in respect of
the unpaid principal amount of each Money Market Advance from
the date the proceeds thereof are made available to the Agency
until the maturity or prep&ent thereof (whether by
acceleration or otherwise) at the ra a per annum quoted for
such Money Market Advance by the Bank and accepted by the
Agency.
(c) Accrued interest on Loans and Money Market
Advances shall be payable (i) on the last day of each Interest
Period applicable thereto and, (A) in the case of an Interest
Period with respect to a Euro-Dollar Loan in excess of 3
months, on each date occurring at 3-month intervals after the
first day of such Interest Period and (B) in the case of an
Interest Period with respect to a Money Market Advance in
excess of 90 days, on each date occurring at 90-day intervals
after the first day of such Interest Period, (ii) at maturity
(whether by acceleration or otherwise), (iii) upon prepayment,
and (iv) if the Loans and Money Market Advances are not paid
in full at maturity, at any time after maturity upon demand.
(d) overdue principal and, to the extent permitted
by law, overdue interest in respect of each Loan and Money
Market Advance shall bear interest payable upon demand for
each day until paid at a rate per annum equal to 2% in excess
of the higher of (i) the rate of interest applicable to such
Loan or such Money Market Advance and (ii) the Base Rate in
effect for such day. Any other amount hereunder that is not
paid when due shall bear interest at a rate per annum equal to
21 in excess of the Base Rate in effect for each day that such
amount remains past due. Such amounts shall be payable upon
demand.
Section 2.08. Ter..�ination or Reductipn of
Cor.M-itrent. The Commitment shall terminate on the Expiry
Date. At any time prior to the Expiry Date the Agency may,
upon at least 3 Business Days' prior irrevocable written
notice to the Bank, (a) terminate the. Commitment at any time,
if no Loans or Money Market Advances are outstanding at such
time or (b) reduce from time to time by an aggregate amount of
$500,000 or $100,000_ multiples in excess thereof, the
Commitment in excess of the aggregate outstanding principal
amount of the Loans and Money Market Advances.
Section 2.09. Qptional Prepayments. The Agency
may, subject to the payment of Breakage Costs as provided in
Section 2.13, if any, that may result from such prepayment,
upon at least (i) one Business Day's notice to the Bank in the
case of Base Rate Loans and (ii) three Euro-Dollar Business
Days' notice to the Bank in the case of Euro-Dollar Loans,
prepay any Loan without premium in whole at any time or from
time to time in part in amounts aggregating $500,000 or any
11
$100,000 multiple in excess thereof by paying to the Bank the
principal amount being prepaid together with accrued interest
thereon to the date of prepayment and a $500 administrative
fee, provided that in the case of a Euro-Dollar Loan no
partial prepayment shall reduce the outstanding principal
balance of any Euro-Dollar Loan to less than $500,000. Any
notice of prepayment pursuant to this Section shall specify
the Borrowing pursuant to which such Loan was made. Money
Market Advances may not be optionally prepaid.
Section 2.10. MgIndatgry-Prepayment.
._(a) The Agency shall prepay the principal amount of
any Loans and Money Market Advances then outstanding together
with all accrued and unpaid interest thereon and Breakage
Costs (as provided in Section 2.13) that may result from such
prepayment concurrently with the issuance by the Agency of any
bonds, notes, certificates of participation or other evidence
of indebtedness secured by Available Tax Revenues for borrowed
money after the date hereof. If less than all outstanding
Loans and Money Market Advances are to be prepaid under this
Section, the Agency may specify in writing to the Bank the
Loans or Money Market Advances to be prepaid and the
Borrowings pursuant to which such Loans or Money Market
Advances were made, provided that if after any such prepayment
any Euro-Dollar Loan or Money Market Advance remains
outstanding with a principal balance less than $500,000 such
Euro-Dollar Loan or Money Market Advance shall automatically
be converted to a Base Rate Loan. In the absence of a
designation by the Agency of the specific Loans or Money
Market Advances to be prepaid, the Bank shall make such
designation in its sole discretion.
- _(b) Notwithstanding the forego o—j,f-BrsQe.
Costs in accordance with the application of Section 2.13 would
result from a prepayment required by this Section other than
on the last day of an Interest Period, the Agency may, at its
option by written notice to the Bank, elect to escrow either
(i) the amount of proceeds received from the issuance of
bonds, notes, certificates of participation or other evidence
of indebtedness, or, if the amount of such proceeds exceeds
the aggregate principal amount of outstanding Loans and Money
Market Advances together with accrued and unpaid interest
thereon, an amount of proceeds equal to the aggregate
principal amount of outstanding Loans and Money Market
Advances together with accrued and unpaid interest thereon, or
(ii) Available Tax Revenues in an amount equal to the
aggregate principal amount of outstanding Loans and Money
Market Advances together with accrued and unpaid interest
thereon, until the earlier of (A) the last day of each
Interest Period with respect to each outstanding Loan or Money
Market Advance, (B) the date on which no Breakage Costs would
12
result from such prepayment or (C) 90 days from the date of
the initiation of the escrow; provided that in any such case
the Bank must first consent to the escrow arrangements
proposed by the Agency, which consent shall not be
unreasonably withheld.
Section 2.11. General ,Provisions as_ to J!aynents.
The Agency shall make each payment of principal of, and
interest on, the Loans, Money Market Advances and of
commitment fees hereunder not later than 12:00 noon (New York
City time) on the date when due in funds immediately available
in New York City at the principal office of the Bank for the
account of (i) the Domestic Lending Off ice in the case of Base
Rate Loans and commitment fee payments, (ii) the Euro-Dollar
Lending Office in the case of Euro-Dollar Loans and (iii) the
Domestic Lending Office in the case of Money Market Advances.
Whenever any payment of principal of, or interest on, Euro-
Dollar Loans shall be due on a day which is not a Euro-Dollar
Business Day, the date of payment thereof shall be extended to
the next succeeding Euro-Dollar Business Day unless as a
result thereof such Euro-Dollar Business Day falls in another
calendar month, in which case it shall be advanced to the next
preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, Base Rate Loans or of any
commitment fee shall be due on a day which is not a Business
Day, the date of payment thereof shall be extended to the next
succeeding Business Day. Whenever any payment of principal
of, or interest on, Money Market Advances shall be due on a
day which is not a Business Day, the date of payment thereof
shall be extended to the next succeeding Business Day. If the
date for any payment of principal is extended by operation of
law or otherwise, interest shall be payable for such extended
time.
Section 2.12. om utat'o of Interestd ees.
Interest based on the Prime Rate and commitment fees shall be
computed on the basis of a year of 365 days (or 366 days in a
leap year) and paid for actual days elapsed (including the
first day but excluding the last day) . All other interest and
fees shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed (including the
first but excluding the last day).
Section 2.13. Fundina_hgsses. If the Agency makes
any payment of principal with respect to any Euro-Dollar Loan
or Money Market Advance on any day other than at the last day
of an Interest Period applicable to such Loan or Money Market
Advance or if the Agency fails to borrow any Euro-Dollar Loan
or Money Market Advance after notice has been given to the
Bank in accordance with Section 2.02 (a) or Section 2.03 (d) , as
the case fray be, the Agency shall reimburse the Bank within 15
days after demand for any Breakage costs incurred by it (or by
13
an existing or prospective Participant in the related Loan or
Money Market Advance); provided that the Bank shall have
delivered to the Agency a certificate as to the amount of such
Breakage Cost, which certificate shall be conclusive in the
absence of manifest error.
ARTICLE III
CHANGES IN CIRCUMSTANCES AFFECTING THE LOANS
Section 3.01. Xnereased -Cost of Maintaining the
mm d Reduced Return,.
(a) If, after the date hereof -and-prior to the date
on which all arounts owing under the Note have been re.Rald ,
the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof or compliance by the Bank (or its Euro-
Dollar Lending Office) with any request or directive (whether
or not having the force of law) of any such authority, central
bank or comparable agency:
(i) shall subject the Bank (or its Euro-Dollar
Lending Office) to any tax, duty or other charge with
respect to its obligation to make Euro-Dollar Loans or
Money Market Advances, its Euro-Dollar Loans or Money
Market Advances, or the !dote, or shall change the basis
of taxation of payments to the Bank (or its Euro-Dollar
Lending Office) of the principal of or interest on its
Euro-Dollar Loans or Money Market Advances or in respect
of any other amounts due under this Agreement, in respect
of its Euro-Dollar Loans or Money Market Advances or its
obligation to make Euro-Dollar Loans (except for changes
in the rate of tax on the overall net income of the Bank
or its Euro-Dollar Lending office) imposed by the juris-
diction in which the Bank I s principal executive of f ice or
its Euro-Dollar Lending Office is located; or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement
(including, without limitation, any imposed by the Board
of Governors of the Federal Reserve System, but excluding
with respect to any Euro-Dollar Loan any such requirement
included in an applicable Euro-Dollar Reserve Percentage)
against assets of, deposits with or for the account of,
or credit extended by, the Bank (or its Euro-Dollar
Lending Office) or shall impose on the Bank (or its Euro-
Dollar Lending Office) or on the London interbank market
any other condition affecting its obligation to make or
14
maintain Euro-Dollar Loans or Money Market Advances, its
Euro-Dollar Loans or Money Harket Advances or the Note;
and the result of any of the foregoing is to increase the cost
to the Bank (or its Euro-Dollar Lending Office) of making or
maintaining any Euro-Dollar Loan or Money Market Advance, or
to reduce the amount of any sum received or receivable by the
Bank (or its Euro-Dollar Lending Office) under this Agreement
or under the Note with respect thereto, by an amount deemed by
the Bank to be material, then, within 30 days after demand by
the Bank, the Agency agrees to pay or cause to be paid to the
Bank solely from Available Tax Revenues such additional amount
or amours as will compensate the Bank for such increased cost
or reduction.
(b) If after the date hereof -and -prior to the date
on which all amounts owing under the Note have been re a d
the Bank s all have determined that the adoption' of any
applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on the
capital of the Bank (or its Parent) as a consequence of its
obligations hereunder to a level below that which the Bank (or
its Parent) could have achieved but for such adoption, change
or compliance (taking into consideration the Bank's policies
with respect to capital adequacy) by an amount deemed by the
Bank to be material, then from time to time, within 30 days
after demand by the Bank, the Agency shall pay to the Bank (or
its Parent) Sow lely-from Available Tax Revenues such additional
a amount or mounts as will compensate the Bank for such
reduction.
(c) The Bank will promptly notify the Agency of any
event of which it has knowledge occurring after the date
hereof, which will entitle the Bank to an additional amount or
amounts pursuant to this Section. A certificate of the Bank
claiming an additional amount or amounts under this
Section, and setting forth (i) the additional amount or
amounts to be paid to it hereunder and (ii) a reasonable
explanation of such additional amount or amounts, shall
constitute a demand for payment and shall be conclusive in the
absence of manifest error. In determining such amount, the
Bank may use any reasonable averaging and attribution methods.
15
Section 3.02. Dasis fgr-J2e&erminJna Intergst
Unavailable. If on or prior to the first day of any Interest
Period deposits in Dollars (in the applicable amounts) are not
being offered to the Bank in the London interbank market for
such Interest Period, the Bank shall forthwith give notice
thereof to the Agency, whereupon the obligation of the Bank to
make Euro-Dollar Loans or offer Money Market Advances shall be
suspended until the Bank notifies the Agency that the
circumstances giving rise to such suspension no longer exist.
Unless the Agency notifies the Bank at least two Business Days
before the date of any Euro-Dollar Loan for which a Notice of
Borrowing has previously been given that it elects not to
borrow on such date, such Loan shall instead be made as a Base
Rate Loan.
Section 3.03. Illegality. If after the date
hereof, the Bank shall have determined that the adoption of
any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable
agency charged with the interpretation or administration
thereof, or compliance by the Bank (or its Euro-Dollar Lending
Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or
comparable agency shall rake it unlawful or impossible for the
Bank (or its Euro-Dollar Lending Office) to make, Maintain or
fund its Euro-Dollar Loans or Noney Market Advances, the Bank
shall forthwith so notify the Agency, whereupon the obligation
of the Bank to make Euro-Dollar Loans or offer Money Market
Advances shall be suspended. Before giving any notice to the
Agency pursuant to this Section, the Bank will designate a
different Euro-Dollar Lending Office if such designation will
avoid the need for giving such notice and will not, in the
judgment of the Bank, be otherwise disadvantageous to the Bank
and if the Agency does not object to such different Euro-
Dollar Lending Office. If the Bank shall determine that it
may not lawfully continue to maintain and fund any of its
outstanding Euro-Dollar Loans or Money Market Advances to
maturity and shall so specify in such notice, the Agency shall
ir.mediately convert the then outstanding balance of each such
Euro-Dollar Loan or such Money Market Advance to a Base Rate
Loan and, at the time of conversion, pay all accrued interest
thereon and compensation costs, if any.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Effectiveness. This Agreement shall
become effective on the date that each of the following
conditions shall have been satisfied (the 11Fffective Date"):
16
(a) receipt by the Bank of a duly executed counter-
part of this Agreement signed by the Agency;
(b) receipt by the Bank of the Note, duly executed
by the Agency and dated the Effective Date;
(c) receipt by the Bank, on or prior to the
Effective Date, of an opinion of Stradling, Yocca,
Carlson & Rauth as counsel to the Agency and an o inion
of the Office of the City Attorney of the City_ o
un•ington Beac , a ressed to the Bank, dated the
Effective Date and when considered to ether includin
substantially a items set forth in the formAattached
hereto as Exhib t C;
(d) receipt by the Bank, on or prior to the
Effective Date, of copies of the resolutions of the
Agency, certified by the secretary or an assistant
secretary of the Agency, authorizing the execution,
delivery and performance by the Agency of this Agreement
and the Note;
(e) receipt by the Bank, on or prior to the
Effective Date, of certified copies of all approvals,
authorizations and consents of any trustee or holder of
any indebtedness or obligation of the Agency or any
governmental agency or public authority, necessary for
the Agency to enter into this Agreement and the Note and
the transactions contemplated herein and in the Note;
(f) receipt by the Bank, on or prior to the
Effective Date, of a certificate of the secretary or an
assistant secretary of the Agency substantially in the
form attached hereto as Exhibit D certifying the names
and true signatures of the officers of the Agency
authorized to sign this Agreement and the Note;
(g) the following statements shall be true and
correct on the Effective Date, and the Bank shall have
received a certificate signed by the Executive Director
of the Agency, dated the Effective Date, stating that:
(i) the representations and warranties con-
tained in this Agreement and each certificate
furnished or delivered by the Agency to the Bank
pursuant hereto are true and correct on and as of
the Effective Date as though made on and as of such
date; and
(ii) no Default or Event of Default has oc-
curred and is continuing or would result from the
execution and delivery by the Agency of this
17
Agreement or the Note or the raking of Loans or
Money Market Advances hereunder; and
(h) receipt by the Bank, on or prior to the
Effective Date, of Such other documents, instruments,
approvals (and, if requested by the Bank, certified
duplicates of executed copies thereof) or opinions as the
Bank may reasonably request.
Section 4.02. vans and Money Market Advances. The
obligation of the Bank to make a Loan or a Money Market
Advance on the occasion of any Borrowing is subject to the
satisfaction of the following conditions:
(a) receipt by the Bank of a Notice of Borrowing
pursuant to Section 2.02, in the case of a Loan, and
receipt by the Bank of a notice of acceptance pursuant to
Section 2.03, in the case of a Money Market Advance;
(b) the fact that, immediately after the making of
such Loan or Money Market Advance, no Default or Event of
Default shall have occurred and be continuing;
(c) the fact that the representations and warranties
of the Agency contained in this Agreement shall be true
on and as of the date of such Borrowing; and
(d) the fact that, immediately after such Borrowing,
the aggregate outstanding principal amount of all Loans
and Money Market Advances shall not exceed the amount of
the Commitment.
Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Agency on the date of such
Borrowing as to the facts specified clauses (b), (c) and (d)
of this Section.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Agency hereby represents and warrants to the
Bank that:
Section 5.01. Due Creation. The Agency is a
redevelopment agency duly created, established and authorized
to transact business and exercise its powers under and
pursuant to the Community Redevelopment Law (Part i of
Division 24 of the Health and Safety Code of the State of
California), and the Agency has the power to own its
properties, to carry on its affairs as now being conducted and
to execute and deliver this Agreement and the Note.
is
Section 5.02. DueAuthorization. No violation: No
Default. The execution, delivery and performance by the
Agency of this Agreement and the Note and the other documents
contemplated hereby and thereby have been duly authorized by
all necessary actions and does not and will not (a) violate
any provision of any law, rule, regulation (including, without
limitation, Regulation U of the Board of Governors of the
Federal Reserve System), order, writ, judgment, injunction,
decree, determination or award presently in effect having
applicability to the Agency or of the charter or bylaws of the
Agency, (b) result in a breach or constitute a default under
any resolution, ordinance, indenture, trust agreement, loan or
credit agreement, lease, instrument or other contractual
restriction binding on or affecting the Agency or by which it
or its properties may be bound or affected, or (c) result in
or require the creation or imposition of any lien, security
interest or other charge or encumbrance upon or with respect
to any of the properties now owned or hereafter acquired by
the Agency. The Agency is not in violation of or in default
in any respect under any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or
any such resolution, ordinance, indenture, trust agreement,
loan or credit agreement, lease, instrument or other
contractual restriction.
Section 5.03. Approvals. No consent, approval or
other action by or any notice to or filing or registration
with any court or administrative or governmental body is or
will be necessary to be made or obtained by the Agency for the
due execution, delivery and performance by the Agency of this
Agreement, the Note or any other documents contemplated
hereby.
Section 5.04. Enforpeabillty. This Agreement
constitutes a legal, valid and binding obligation of the
Agency, enforceable against the Agency in accordance with its
terms, subject as to enforceability, to bankruptcy, insol-
vency, moratorium, or other laws and equitable principles
relating to or affecting creditors' rights generally from time
to time in effect.
Section 5.05. Litigation. There are no actions,
suits, or proceedings pending with service of process
accomplished or, to the best knowledge of the Agency after due
inquiry, threatened against or affecting the Agency, or any
properties or rights of the Agency, by or before any court,
arbitrator, or administrative or governmental body which
(a) if determined adversely to the Agency would adversely
affect the Agency's ability to perform its obligations under
this Agreement or (b) relate to the execution, delivery or
performance by the Agency of this Agreement and the Note.
19
Section 5.06. Disc gsure. There is no fact known
to the Agency that materially adversely affects or in the
future may (so far as the Agency can now foresee) materially
adversely affect the ability of the Agency to perform its
obligations hereunder that has not been set forth in this
Agreement or in the other documents, certificates, and
statements furnished to the Bank by or on behalf of the Agency
prior to the date hereof in connection with the transactions
contemplated hereby.
Section 5.07. Fg EovCreJctn_JMMur1Jty.The Agency
does not enjoy any rights of immunity on the grounds of
sovereign immunity in respect of its obligations under this
Agreement or the Note.
Section 5.08. Pledged Rev n� ues. There is no lien
on the Available Tax Revenues with a right of payment prior to
or on a parity with the security interest created hereunder in
the Available Tax Revenues. The Bank has a perfected security
interest in the Available Tax Revenues _pursuant to Section
33641.5 of the California Health and Sa _eY Coaee 'arid -is of
required to take-furt er action to perfect —Er —maintain such
security interest. Schedule 1 sets forth a true and correct
estimation by the Agency (based upon a certification of Tax
Revenues by the Auditor -Controller of the County of Orange) of
its tax revenue surplus for the Agency's 1991-92 fiscal year
and the anount set forth on such Schedule as "Surplus" is the
Agency's estimation of the Available Tax Revenues for such
fiscal year. Schedule 2 sets forth a projection of the
Agency's tax increment revenues for its 1991-92, 1992-930
1993-94, 1994-95 and 1995-96 fiscal years, which projection is
a true and fair estimate of the Agency's tax increment
revenues made on the basis of reasonable assumptions. The
obligations of the Agency under this Agreement are junior in
right of payment only to the holders of the Senior Loan -
provided, however, that the Agency shall be allowed to make
payments upon obligations incurred in the ordinary course of
business, so long as such payments do not impair the Agency's
ability to issue bonds or repay any outstanding Loans or Money
Market Advances.
Section 5.09. No ERISA Plans. The Agency has not
established, is not a party to and has never contributed to an
employee benefit plan other than a "governmental plan" within
the meaning of Section 414(d) of the Code or Section 3(32) of
ERISA.
Section 5.10. v a In the
ordinary course of its affairs, the Agency conducts an ongoing
review of the effect of Environmental Laws on the affairs,
operations and properties of the Agency, in the course of
which it identifies and evaluates associated liabilities and
W
costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of any
properties presently or previously owned or operated, any
capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards
imposed by law or as a condition of any license, permit or
contract, any related constraints on operating activities and
any actual or potential liabilities to third parties,
including employees, and any related costs and expenses). On
the basis of this review, the Agency has reasonably concluded
that Environmental Laws are unlikely to have a material
adverse effect on the Agency's ability to perform its
obligations under this Agreement.
ARTICLE VI
COVENANTS
So long as any Loan or Money Market Advance remains
outstanding or the Commitment has not terminated:
Section 6.01. Cgryliange w 'Laws. The Agency
covenants that it will comply with the requirements of all
applicable laws, rules, regulations, and orders of any
governmental authority having jurisdiction over the Agency,
non-compliance with which would materially adversely affect
its ability to perform its obligations under this Agreement or
the Note.
Section 6.02. Agency to Maintain Existence. Except
as required by the Constitution and laws of the State of
California, the Agency agrees that it will maintain its exis-
tence as a redevelopment agency under the Constitution and
laws of the State of California.
Section 6.03. Notice of Default. The Agency will
furnish to the Bank as soon as possible, and in any event
within five Business Days after the discovery by any officer
of the Agency of any Default or Event of Default, an officer's
certificate of the Agency, setting forth the details of such
Default or Event of Default and the action which the Agency
proposes to take with respect thereto.
Section 6.04. Further Assurances. The Agency will
execute, acknowledge where appropriate, and deliver from time
to time promptly at the request of the Bank all such
instruments and documents as in the Treasonable opinion of the
Bank are necessary or desirable to carry out the intent and
purposes of this Agreement.
21
Section 6.05. books_ and Records: Financial
,$tatements. The Agency will keep proper books of record and
account in which full, true, and correct entries in conformity
with generally accepted accounting principles and all
requirements of law shall be made of all dealings and
transactions relating to the Agency, the Tax Revenues, the
Available Tax Revenues, and, so long as any Loans or Money
Market Advances remain outstanding, will prepare and deliver
to the Bank no later than January_ 31 next following the end of
each of the Agency's fiscal years, a copy of the Agency's
annual audited financial statements and a copy of the Agency's
annual budget.
Section 6.06. Inspection. The Agency covenants, to
the fullest extent permitted by law, that upon reasonable
notice it will permit any person designated by the Bank in
writing, at the Bank's expense, to visit any of the properties
of the Agency, to examine the books and financial records of
the Agency and make copies thereof or extracts therefrom, and
to discuss the affairs, finances, and accounts of the Agency
with the principal officers of the Agency, as the case may be,
all at such reasonable times and as often as the Bank may
reasonably request.
Section 6.07. No ERISA Plans. The Agency will not
establish, be a party to and will not contribute to any
employee benefit plan other than a "governmental plan" within
the meaning of Section 414 (d) of the Code and Section 3 (32) of
ERISA.
Section 6.08. The
Agency will not incur or suffer to exist any indebtedness for
borrowed money a able from the Available Tax Revenues after
the date hereof unless the proceeds of such indebtedness are
applied to prepay or pay all outstanding Loans and Money
Market Advances in accordance with the provisions of Section
2.10.
Section 6.09. .se_ of _Proceeds. No part of the
proceeds of any Loan or Money Market Advance hereunder will be
used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate of buying or carrying any
"margin stock" within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System. Prior to the
Expiry Date, the Agency will provide the Bank with a schedule
setting forth the purposes for which the proceeds of each Loan
and Money Market Advance were used.
Section 6.10. Payment of Loan� and Money Market
Advances. The Agency agrees that it will repay all Loans and
Money Market Advances made hereunder on or prior to the Expiry
Date from either (a) Available Tax Revenues that are currently
22
held by the Agency or that ma
the date hereof but prior to
or (b) the proceeds of
participation or other evide
on behalf of the Agency after
Expiry Date. The Agency fur
best efforts to cause bonds
Expiry Date o repay all ou
y be received by the
the Expiry Date fr
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
o
Section 7.01. Events of Default: Reredfes. Upon
the occurrence of any of the following specified events (each
an "Event of Default"):
(a) the Agency shall fail to pay to the Bank when
due any principal of or interest on any Loan or Money
Market Advance, or any commitment fee or any other amount
payable hereunder; or
(b) the Agency shall fail to observe or perform any
covenant contained in Sections 2.10, 6.02, 6.03, 6.08 or
6.10; or
(c) except as otherwise provided in paragraphs (a)
and (b) above, the Agency shall fail to perform any of
its other covenants, agreements or obligations hereunder
(including those incorporated herein by reference), under
the Note or under any other document executed in
connection herewith, provided that such failure continues
for more than 30 days after receipt by the Agency of
written notice of such failure to perform by the Bank; or
(d) any material representation or warranty :wade by
the Agency hereunder or in any report, certificate,
financial statement, document or other instrument
provided or to be provided in connection herewith shall
have been or shall be materially false at the time when
made; or
(e) the Agency shall (i) voluntarily commence any
proceeding or file any petition seeking relief under
Title 11 of the United States Code (the "Bankruptcy
Code") or any other federal, state or foreign bankruptcy,
insolvency or similar law, (ii) consent to the
institution of, or fail to controvert in a timely and
appropriate manner, any such proceeding or the filing of
any such petition, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian,
23
sequestrator or similar official for the Agency or for a
substantial part of its property, (iv) file an answer
admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally
to pay its debts as they become due or (vii) take action
for the purpose of effecting any of the foregoing; or
(f) an involuntary proceeding shall be commenced or
an involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect of
the Agency, or of a substantial part of its property,
under the Bankruptcy Code or any other federal, state or
foreign bankruptcy, insolvency or similar law or (ii) the
appointment of a receiver, trustee, custodian,
sequestrator or similar official for the Agency or for a
substantial part of its property, and such proceeding or
petition shall continue undismissed and unstayed for 60
days; or an order or decree for relief shall be entered
against the agency under the Bankruptcy Code as now or
hereafter in effect; or
(g) any default or event of default shall have
occurred and be continuing under any agreement evidencing
indebtedness of the Agency secured by a pledge of Tax
Revenues and such default or event of default shall
continue beyond any applicable grace period provided in
any such agreement; or
(h) any default in the observance or performance of
any agreement or condition in any agreement evidencing
indebtedness of the Agency secured by a pledge of Tax
Revenues or other instrument securing such agreement
shall have occurred, the effect of which default or other
event or condition is to cause, or permit the holder or
holders (or a trustee or agent on behalf of such holder
or holders) to cause (determined without regard to
whether any notice is required), any such indebtedness to
become due prior to its stated maturity; or any
indebtedness of the Agency secured by Tax Revenues shall
be declared due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment,
prior to the stated maturity thereof;
then, and in every such event, (1) in the case of the Events
of Default specified in paragraphs (e) and (f) above, the
Commitment shall thereupon automatically be terminated and the
principal of and accrued interest on the Note shall
automatically become due and payable without presentment,
demand, protest or other notice or formality of any kind, all
of which are hereby expressly waived, (2) in the case of any
24
other Event of Default specified above, the Bank may, by
notice in writing to the Agency, terminate the Commitment
hereunder, if still in existence, and it shall thereupon be
terminated, and the Bank may, by notice in writing to the
Agency, declare the Note and all other sums payable hereunder
to be, and the same shall forthwith become, due and payable
without presentment, demand, protest or other notice or
formality of any kind, all of which are hereby expressly
waived, and (3) in the case of any Event of Default specified
above, the Bank may, take whatever action at law or in equity
that may appear necessary or desirable to enforce the Bank's
lien hereunder on the Available Tax Revenues.
Section 7.02. Exer.gse of Rights. No failure or
delay on the part of the Bank to exercise any right, power or
privilege under this Agreement and no course of dealing
between the Bank and the Agency or any other party shall
operate as a waiver of any such right, power or privilege, nor
shall any single or partial exercise of any such right, power
or privilege preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The
rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which the Bank
would otherwise have pursuant to law or equity. No notice to
or demand on any party in any case shall entitle such party to
any other or further notice or demand in similar or other
circumstances, or constitute a waiver of the right of the
other party to any other or further action in any
circumstances without notice or demand.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Voticen. All notices, requests and
other communications provided for hereunder shall be in
writing (including bank wire,A facsimile transmission or
similar writing). Each such notice, request or other
communication shall be effective 'a) if given by mail, 3 days
after the date of deposit in t e mails, postage prepaid,
addressed as specified in this Section, (b) if given by
facsimile transmission, when sent to the facsimile number set
forth below (or such other number as may be provided by one
party hereto to the other party hereto in writing), provided
-that a copxof such notice is also given by mail or ALCLif
given by other means, Men delivered to the address specs ied
in this Section. Notwithstanding the foregoing, notices to
the Bank pursuant to Section 2.02, 2.03 and 2.09 which are
given otherwise than by facsimile transmitting machine shall
not be effective until received by the Bank. Any such notice,
request or other communication shall be delivered or addressed
as follows:
25
if to the Agency:
and if to the Bank:
Redevelopment Agency of the
City of Huntington Beach
2000 Main Street
Huntington Beach, California
92648
Attention: Executive
Telephone: ( )
Director
Facsimile; ( ) ;
Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, New York 10260
Attention: Credit Administration
Gerald M. Corso
Telephone: (212) 648-6812
Facsimile: (212) 648-5022;
or at such other address as shall be designated by any such
party in a written notice to the other party.
Section 8.02. hmen�Men&and Waiverp. None of the
provisions of this Agreement may be amended, changed, waived,
discharged or terminated except by an instrument in writing
signed and duly executed by the parties hereto.
Section 8.03. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and shall
inure to the benefit of the Agency and the Bank and their
respective successors and assigns, except that the Agency may
not assign or otherwise transfer any of its rights or
obligations under this Agreement without the prior written
consent of the Bank.
(b) The Bank may at any tire assign to one or more
banks or other institutions (each an "Assignee"), all, or a
proportionate part of all, of its rights under this Agreement
and the Note. The Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in the Commitment or any or all of its
Loans and Money Market Advances. In the event of any such
grant by the Bank of a participating interest to a
Participant, whether or not upon notice to the Agency, the
Bank shall remain responsible for the performance of its
obligations hereunder, and the Agency shall continue to deal
solely and directly with the Bank in connection with the
Bank's rights and obligations under this Agreement. Any
agreement pursuant to which the Bank may grant such a
participating interest shall provide that the Bank shall
retain the sole right and responsibility to enforce the
obligations of the Agency hereunder including, without
limitation, the right to approve any amendment, modification
26
or waiver of any provision of this Agreement; provided that
such participation agreement may provide that the Bank will
not agree to any modification, amendment or waiver of this
Agreement which (i) increases or decreases the Commitment of
the Bank, (ii) reduces the principal of or interest on any
Loan or Money Market Advance or fees hereunder or (iii)
postpones the date fixed for any payment of principal of or
interest on any Loan or Money Market Advance or any fees here-
under without the consent of the Participant. The Agency
agrees that each Participant shall, to the extent provided in
its participation agreement, be entitled to the benefits of
Sections 2.13 and L3.01 hereof with respect to its parti-
cipating interest.
(c) The Bank may at any time assign all or any
portion of its rights under this Agreement and the Note to a
Federal Reserve Bank. No such assignment shall release the
Bank from its obligations hereunder.
(d) No Assignee, Participant or other transferee of
the Bank's rights shall be entitled to receive any greater
payment under Section k.01 hereof than the Bank would have
been entitled to receive with respect to the rights trans-
ferred unless such transfer is made with the Agency's prior
written consent or at a time when the circumstances giving
rise to such greater payment did not exist.
Section 8. 04. Exj2enses • ocur-e a es • de . -
fication.
(a) The Agency shall pay (i) fees and disbursements
of White & Case, special counsel to the Bank (which fees and
disbursements shall not exceed $25,000) in connection with the
negotiation, preparation and execution of this Agreement and
the other documents described herein, (ii) all out-of-pocket
expenses and internal charges of the Bank (including fees and
disbursements of counsel to the Bank) in connection with any
waiver or consent hereunder or any amendment hereof or any
Default or alleged Default hereunder and (iii.) if there is an
Event of Default, all out-of-pocket expenses and internal
charges incurred by the Bank (including fees and disbursements
of counsel and time charges of attorneys who may be employees
of the Bank) in connection with such Event of Default and
collection and other enforcement proceedings resulting
therefrom. The Agency shall indemnify the Bank against any
transfer taxes, documentary taxes, assessments or charges made
by any governmental authority by reason of the execution and
delivery of this Agreement or the Note.
(b) To the extent permitted by law, the Agency
agrees to indemnify the Bank and hold the Bank harmless from
and against any and all liabilities, losses, damages, costs
27
and expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be
incurred by the Bank in connection with any investigative,
administrative or judicial proceeding (whether or not the Bank
shall be designated a party thereto) relating to or arising
out of this Agreement or any actual or proposed use of
proceeds of Loans and Money Market Advances hereunder;
provided that the Bank shall not have the right to be
indemnified hereunder for its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
This indemnification shall survive the termination of the
Commitment and the payment in full of the Loans and Money
Market Advances.
Section 8.05. ead na_st Table of Contents. Article
and Section headings in this Agreement and the Table of
Contents are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any
other purpose.
Section 8.05. Severabilty_of Provisions. Any pro-
vision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforce-
ability without invalidating the remaining provisions hereof
or affecting the validity or enforceability of such provision
in any other jurisdiction.
Section 8.07. Counterparts; Integration. This
Agreement ray be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of
which counterparts, when so executed and delivered, shall be
deemed to be an original and all of which counterparts, taken
together, shall constitute one and the same Agreement. This
Agreement constitutes the entire agreement and understanding
between the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to
the subject matter hereof.
Section 8.08. CCoverning.Law ,pUd Jurisdiction.
(a) This Agreement shall be deemed to be a contract
made under the laws of the State of California and for all
purposes shall be construed in accordance with the laws of
said state, without regard to the principles of conflicts of
laws. Any action or proceeding arising out of or relating to
this Agreement or the Note shall be heard and determined in an
appropriate state or federal court in the County of Los
Angeles, California. The Agency irrevocably waives, to the
fullest extent permitted by law, any objection which it may
now or hereafter have to the laying of venue of any such suit,
action or proceeding brought in such courts and any claim that
28
any such suit, action or proceeding has been brought in an
inconvenient forum. The Agency irrevocably consents to the
service of any and all process in any such suit, action or
proceeding by mailing or delivering copies of such process to
the Agency's General Counsel at the Agency's address provided
in Section 8.01. The Agency agrees that a final judgment
(after all appeals have been exhausted) in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. All mailings under this Section shall be by
certified mail, return receipt requested.
(b) Nothing in this Section shall affect the right
of the Bank to serve legal process in any other manner
permitted by law or affect the right of the Bank to bring any
suit, action or proceeding against the Agency or its property
in the courts of any other jurisdiction.
Section 8.09. a v a . EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVERS, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 8.10. No Third Party Beneiciaries. Each
party agrees that this Agreement shall not benefit or create
any right or cause of action in or on behalf of any person
other then the parties hereto.
29
IN WITNESS WHEREOF, each of the parties hereto has
caused a counterpart of this Agreement to be duly executed and
delivered as of the date first above written.
Approved as to Form:
By
Associate Counsel
REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
By
Executive Director
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
Vice President
30
Schedule i
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
MAIN PIER PROJECT AREA
CALCULATION OF TAX REVENUE SURPLUS
F/Y 1991-92
Sources:
Tax Increment $
Utility Roll Revenue (1)
Supplemental Assessed Revenue (1)
Interest Income
Total
Uses:
Huntington Beach Redevelopment
Projects TABs, 1988 $
Housing Set -Aside
Tax Sharing Agreement
County Fees
Total
Surplus
(1) Estimate; represents actual for F/Y 1990-91.
31
Schedule 2
PROJECTION Of TAX INCREHENT REVENUES
MAIN PIER PROJECT AREA
1991192 1992193 1993t94 1994/9S 1995196
(Estimated) (Projected) (Projected) • (Projected) (Projected)
SECURED VALUATIDN
Land(1)
112.077,604
112.077.604
114.319,136
116,605.539
118.937.650
Improvements(1)
137,666.136
137.666,136
140.419,459
143,227,W
146.092,405
+ General Increase (2%)
NIA
4.994,1375
5,094.772
5,196,668
5.300.601
+ Projected improvements
W/A
0
0
0
0
Total Land S Improvements
249,743,740
254,738.615
259,633.387
265,030.05E
27C.330.656
+ Personal Property
52,095
5Z.095
52.095
52.095
S2.095
+ Utilities
600
600
600
600
600
Total Secured Valuation
249.796,435
2S4,791,310
259.886.082
26S 082 750
270.383.351
— Base Year
46.534,392
46,534,392
46.534.392
46:534:392
46,534,392
INCREMENT VALUATION
203,262.043
209.256.918
213.351.690
218.548.358
223,948,959
x Tax Rate
1.06809%
1.0611%
1.048%
1.040%
1.030%
Available Secured Increment
2.171,022
2,209,814
2.235.926
2,272,203
2.305,644
x Collection Rate
98%
98N
98%
90%
98%
NET SECURED INCREMENT REVENUE
2,127.601
2.165,618
2.191.207
2,227.445
2.259.531
UNSEME
Land a Irprovements(1)
10.895.146
10.898.146
11,116.109
11.338.431
11.565.200
f General Increase (2%)
N/A
2179E3
22I,322
226,769
231,304
Total Land i Improvements
10,898,146
11.116:109
11,338.431
11.565,200
11,796,504
Personal Property
9,601,641
9,601.641
9,601.641
9,601,641
9,601,641
Total Unsecured Valuation
20.499.787
20.717,750
20.940.072
21,166.941
21,398.145
— Bast Year
10.453.771
10.453,771
10,453,771
10.453,771
10,453,771
INCREMENT VALUATION
10.046,016
10,263.979
10.486.301
10,713,070
10.944,374
x Tax Rate
1.07330%
1.0681%
1.051Z
1.048%
1.040%
Available Unsecured Increment
107,824
109.629
111.270
112.273
113.621
x Collection Rate
95%
95%
95%
95%
95%
NET UNSECURED 1KREMENT REVENUE
102,433
104.147
105.707
106.659
108,130
tKITARY REVENUE
61,787
61,767
61.787
61.787
61,787
TOTAL VALUATION
$270.296.222
$275.509.C60
S280.626.154
$285,249.591
$291.781,496
TOTAL INCREMENT VALUATION
213.308.059
218,520,097
223,837,991
229.261.428
234,793,333
TOTAL EST. IKREMENT REVENUE
2,291,020
2.331,551
2.358,700
2.395,891
2.429.448
20% Housing Set —Aside
458,364
466.310
471.740
479,178
48S,890
NET INCREMENT REVENUE
$1,633.456
$1.565,241
$1.886.960
$1,916,713
$1,943,559
(1) T" figures havt been adjusted to include the waterfront Hilton on the secured roll ($42.108.847) instead
of the unsecured ra11. Personal Property (56,534.713) rmains on the unsecured roll. In addition, the
land and Improvements unsecured valuation has been reduced by $7,932.855, the aajount of escaped assessments
included on the unsecured roll.
Sources; Orange County Assessor; Orange County Auditor -Controller;
Verna::a Wolfe Associates. Inc.
?74BE
NOTE
50,000 April 15, 1992
U.S. $A
Huntington Beach, CaWrICfornia
FOR VALUE RECEIVED, THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH, a redevelopment agency created,
established and authorized to transact business and exercise
its powers under the laws of California (the "Agency"),
hereby unconditionally promises to pay from Available Tax
Revenues to the order of MORGAN GUARANTY TRUST COMPANY OF NEW
YORK (the "Bank") at its Domestic Lending Office, the unpaid
principal amount of each Loan and Money Market Advance made
by the Bank to the Agency pursuant to the Credit Agreement
referred to below on the last day of the Interest Period
relating to such Loan. The Agency promises to pay from
Available Tax Revenues interest on the unpaid principal
amount of each such Loan and Money Market Advance on the
dates and at the rate or rates provided for in the Credit
Agreement.
All such payments of principal and interest shall
be made in lawful money of the United States of America in
Federal or other immediately available funds at the office of
the Bank located at 60 Wall Street, New York, New York 10260-
0060.
All Loans and Money Market Advances made by the
Bank, the maturities thereof and all repayments of the
principal thereof shall be recorded by the Bank and, prior to
any assignment hereof, appropriate notations to evidence the
foregoing information with respect to each such Loan and
Money Market Advance then outstanding shall be endorsed by
the Bank on the schedule attached hereto and made a part
hereof; provided that the failure of the Bank to make any
such recordation or endorsement shall not affect the
obligations of the Agency hereunder or under the Credit
Agreement.
This Note is the Note referred to in the Credit
Agreement dated as of April 15. 1992, by and between the
Agency and the Bank (as the same may be amended from time to
time, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings. Reference
is made to the Credit Agreement for provisions for the
A-1
prepayr.►ent hereof and the acceleration of the maturity
hereof.
THE PAYMENT OBLIGATIONS OF THE AGENCY UNDER THE
CREDIT AGREEMENT AS EVIDENCED BY THIS NOTE ARE NOT A DEBT OF
THE CITY OF HUNTINGTON BEACH, THE COUNTY OF ORANGE, THE STATE
OF CALIFORNIA, OR ANY OF ITS POLITICAL SUBDIVISIONS AND
NEITHER THE CITY OF HUNTINGTON BEACH, THE COUNTY OF ORANGE,
THE STATE OF CALIFORNIA, NOR ANY OF ITS POLITICAL
SUBDIVISIONS IS LIABLE ON THEM, NOR IN ANY EVENT SHALL THE
PAYMENT OBLIGATIONS OF THE AGENCY UNDER THE CREDIT AGREEMENT
BE PAYABLE OUT OF ANY FUNDS AND PROPERTIES OTHER THAN THOSE
OF THE AGENCY.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF CALIFORNIA.
THE REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
By:
Nare:
Title:
A-2
NOTE SCHEDULE
Date of Loan
or Advance
Amount of Loan
or Advance
Type of Loan
Date and Amount
of Interest Paid
Date and Amount
of Principal Paid
A-3
[FORM OF]
NOTICE OF BORROWING
Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, New York 10260-0060
Attention: Loan Department
Gentlemen:
[Date]
The undersigned, an authorized officer of The
Redevelopment Agency of the City of Huntington Beach (the
"Agency"), refers to the Credit Agreement, dated as of
April 15, 1992 (as amended from time to time, the "Credit
Agreement," the terms defined therein being used herein as
therein defined), between the Agency and you, and hereby
gives you notice, irrevocably, pursuant to Section 2.02 of
the Credit Agreement, that the Agency hereby requests a
Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to
such Borrowing (the "Proposed Borrowing") as required by
Section 2.02 of the Credit Agreement:
(1) the Business Day of the Proposed Borrowing is
, 1992;
(2) the Proposed Borrowing is to consist of a
[Base Rate Loan] [Euro-Dollar Loan] (delete as
applicable);
(3) the principal amount of the Proposed
Borrowing is $ ;
[(4) the Interest Pe iod for the Proposed
Sorrowing is [1] [2] [3] 4 5 (delete as
applicable) months; and]=
V To be included for a Proposed Borrowing of a Euro-Dollar
Loan.
B-1
((5) the Proposed Borrowing will consist of a
Refunding Loan and the Loan or Money Market Advance
being repaid was made to the Agency on ,
1992.1=
The undersigned hereby certifies on behalf of the
Agency that the following statements are true on the date
hereof, and will be true on the date of the Proposed
Borrowing:
(A) the representations and warranties contained
in Article V of the Credit Agreement are correct,
before and after giving effect to the'Proposed
Borrowing and to the application of the proceeds
thereof, as though made on and as of such date; and
(b) no Default or Event of Default has occurred
and is continuing, or would result from such Proposed
Borrowing or from the application of the proceeds
thereof.
Very truly yours,
THE REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
By
Name:
Title:
= To be included if the Proposed Borrowing is a Refunding
Loan.
B-2
[FORM OF OPINION OF COUNSEL TO THE AGENCY]
April 15, 1992
Morgan Guaranty Trust
Company of New York
60 Wall Street
New York, New York 10260
Re: Credit Agreement, dated as of
April 15, 1992, between Morgan
GuaranTy Trust Coripany of New York
and The Redevelopment Agency of
e City of Huntington Beach
Ladies and Gentlemen:
We have acted as counsel to The Redevelopment
Agency of the City of Huntington Beach (the "Agency"). We
are familiar with the matters relating to the preparation,
execution and delivery of a Credit Agreement, dated as of
April 15, 1992 (the "Credit Agreement"), between the Agency
and yo`u (the "Bank"). Terms defined in the Credit
Agreement are used herein as therein defined. Among other
things, we have examined:
(1) the Agency's fully executed counterpart of the
Credit Agreement, including all Exhibits and
Schedules attached thereto; and
(2) the by --laws of the Agency as now in effect (the
"By-laws").
We have also examined the originals, or copies
certified to our satisfaction, of (i) such other corporate
records of the Agency, certificates of public officials and
of officers of the Agency, (ii) the agreements, instruments
and documents which affect or purport to affect the
obligations of the Agency under the Credit Agreement, and
(iii) such other agreements, instruments and documents as
we have deemed necessary as a basis for the opinions
hereinafter expressed. We have assumed the due execution
and delivery of the Credit Agreement by the Bank.
C-1
Morgan Guaranty Trust Company of New York
April 15, 1992
Based upon the foregoing and upon such
investigation as we have deemed necessary, we are of the
opinion that:
1. The Agency is a redevelopment agency duly
organized and validly existing under the laws of
the State of California and has the power to own
its properties and to carry on its affairs as now
being conducted.
2. The execution, delivery and performance by the
Agency of the Credit Agreement and the Note is
within the Agency's powers, have each been duly
authorized by necessary governmental action, (i)
do not contravene or violate (A) any provision of
any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award
presently in effect and having applicability to
the Agency, (B) any instrument or contractual
restriction binding on or affecting the Agency,
or (C) any provision of the resolution pursuant
to which the Agency was created or the Agency's
by-laws, (ii) will not result in a breach of any
instrument or contractual obligation binding on
or affecting the Agency, and (iii) to the best of
my knowledge, will not result in, or require, the
creation or imposition of any lien upon or with
respect to any other properties now owned or
hereafter acquired by the Agency.
3. No further authorization, consent or approval or
other action by, and no further notice to or
filing or registration with, any governmental
authority, regulatory body or court is required
for the due execution, delivery and performance
by the Agency of the Credit Agreement and the
Note.
4. Each of the Credit Agreement and the Note has
been duly executed and delivered by the Agency
and is the legal, valid and binding obligation of
the Agency enforceable against the Agency in
accordance with its terns (except with respect to
any indemnification provisions, as to which we
express no opinion).
C-2
Morgan -Guaranty Trust Company of New York
April 15, 1992
5. There is no pending, or to the best of our
knowledge after due inquiry, threatened action,
suit, investigation or proceeding against or
affecting the Agency before any court,
governmental agency or arbitrator which may
materially adversely affect the ability of the
Agency to perform its obligations under the
Credit Agreement or the Note which purports to
affect the legality, validity or enforceability
of the Credit Agreement or the Note.
6. The Agency is authorized to pledge, and pursuant
to the Credit Agreement has validly pledged
ursuant to section 33641.5 of the Health and
SafetX Code, to the Bank the Available Tax
Revenues as security for the payment and
performance of the Agency's obligations to the
Bank under the Credit Agreement. Such pledge is
a valid and binding obligation of the Agency
enforceable against the Agency and its successors
and assigns. The Bank's security interest in the
Available Tax Revenues is not subject to any lien
with -a right of payment senior to the Agency's
obligations to the Bank under the Credit
Agreement.
7. The Agency does not enjoy any rights of i=unity
on the grounds of sovereign immunity in respect
of its obligations under the Credit Agreement or
Note.
The opinions set forth above are subject to the following
qualifications:
(a) The enforceability of the Agency's obligations
under the Credit Agreement and Note are subject
to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally.
(b) The enforceability of the Agency's obligations
under the Credit Agreement and Note may be
subject to general principles of equity
(regardless of whether such enforceability is
considered in a proceeding in equity or at law).
C-3
Morgan Guaranty Trust Company of New York
April 15, 1992
(c) We are members of the State Bar of California and
accordingly do not purport to be experts on, or
to be qualified to express any opinion herein
concerning, nor do we express any opinions herein
concerning any law other than the federal laws of
the United States of America and the laws of the
State of California, excluding however, federal
or state securities and banking law.
This opinion is furnished to you pursuant to your
request and is for your benefit only and may not be relied
upon by any other person or delivered to any other person
without our prior written consent.
Very truly yours,
C-4
THE REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
o a a
I, the undersigned, of
The Redevelopment Agency of the City of Huntington Beach, a
redevelopment agency created, established and authorized to
transact business and exercise its powers under the laws of
the State of California (the "Agency"), DO HEREBY CERTIFY
that:
1. This Certificate is furnished pursuant to
Section 4.01(f) of the Credit Agreement, dated as of
April 15, 1992, by and between the Agency and Morgan Guaranty
Trust Company of New York (such Credit Agreement, as in
effect on the date of this Certificate, being herein called
the "Credit Agreement"). Unless otherwise defined herein
capitalized terms used in this Certificate shall have the
meanings assigned to those terms in the Credit Agreement.
2. Attached hereto as Exhibit A is a true and
correct copy of the resolutions duly adopted by the Agency at
a meeting an , 1992, authorizing the execution,
delivery and performance by the Agency of the Credit
Agreement and the Note, which resolutions have not been
revoked, modif ied, amended or rescinded and are still in full
force and effect.
3. Attached hereto as Exhibit B is a true and
correct copy of the resolution of the City of Huntington
Beach establishing the Agency, together with all
modifications and amendments to such resolution through the
date hereof.
4. Attached hereto as Exhibit C is a true and
correct copy of the Agency's by-laws as in effect on
, 1992, together with all modifications and
amendments thereof through the date hereof.
5. is the
Executive Director of the Agency and has
since . The signature set forth below _
name is his genuine signature.
D-1
duly appointed
held such office
's
Executive Director
6. On the date hereof, the representations and
warranties contained in Article V of the Credit Agreement are
true and correct.
7. On the date hereof, no Default or Event of
Default has occurred or is continuing or Would result from
the execution and delivery by the Agency of the Credit
Agreement or the Note or the making of Loans or Money Market
Advances thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand
this day of , 1992.
THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
Name:
Title:
D-2
Submitted to:
Submitted by:
Prepared by:
Subject:
REQUEST FOR CITY COUNCIL/ .
REDEVELOPMENT AGENCY ACTION jrcr«n
ycf J4UNTgAp-r.V ,.V,, 1992
'! b,9 •- '" Date
Honorable Mayor and City Council
Michael T. Uberuaga, City Administtor ra
Robert J. rranz, Deputy City Administrator
Approval of Credit Agreement — Loan from 3.P. Morgan Bank
Consistent with Council Policy?
/&.,Zl 6 36 2
[x] Yes [ ] New Policy or Exception Qq,, ?,-,o a, .2 !-
Statement of Issue, Recommendation, Analysis, Funding Source, Alternative Actions, Attachments:
QBJECTIVE: To approve a credit agreement for a loan to the Agency of $4,350,000
(maximum) to provide funding for the Agency to meet its obligations under the
Third Amended Disposition and Development Agreement (DDA) with Robert L. Mayer
Corporation (RLM) which was approved on March 16, 1992.
1. Adopt Redevelopment Agency Resolution 2 2 ( approving a credit
agreement which authorizes a $4,350,000 loan from Morgan Garantee Trust
Company to the Redevelopment Agency.
2. Adopt City Council Resolution 6_ K-2— consenting to the approval of a
credit agreement which authorizes a $4,350,000 loan from Morgan Garantee
Trust Company to the Redevelopment Agency.
NALY : Attached is a copy of the staff report which was submitted to the
Agency on March 16, 1992 recommending an amendment to the DDA with the RLM
Corporation. Under that amendment, the Agency will make a payment of $4,300,000
to the RLM Corporation and their lending bank, Dai Ichi Kangyo Bank (DKB) as a
payoff of amounts currently owing to the RLM Corporation in excess of $6,000,000.
The Agency also approved on March 16, 1992 the offer of J.P. Morgan Bank for a
temporary loan of $4,300,000 (net) to provide a temporary funding source to meet
the Agency's obligations under the DDA amendment. The interest rate for the
temporary loan is less -than 5% (current rates) and the loan is for a maximum
term of six (6) months. This temporary financing will be replaced when the
Agency's long—term bonds are issued in the next three to six months. The long
term bond issue (previously authorized by the Agency on March 2, 1992) is a
refinancing of.1988 Agency bonds plus the issuance of new bonds for the payment
to RLM Corporation. In the event that favorable market conditions do not occur
for this refinancing bond issue in the next few months, then the Agency staff
will present a "stand alone" bond issue to the Agency for consideration. A
stand alone bond issue would provide bond proceeds only for repayment of the
loan from J. P. Morgan Bank..
The attached credit agreement has been drafted consistent with the offer of
J.P. Morgan dated March 5, 1992 and has been reviewed by the Agency's legal
counsel and City Attorney's Office. Apprcval of these loan documents will allow
the program'approved by the Agency in March to go forward as planned.
r
REQUEST FOR COUNCIL ACTION
AND
REQUEST FOR REDEVELOP14ENT AGENCY ACTION
Approval of Credit Agreement — Loan from J.P. Morgan Bank
ALTERNATIVE ACTIONS: There are no alternative actions that would be consistent
with the Agency approval on March lb, 1992 of the J.P. Morgan Bank offer.
FUNDING SOURCES: As indicated
ATTACHMENTS:
1. Prior staff report
2. City Council Resolution
3. Redevelopment Agency Resolution
4. Credit. Agreement between Redevelopment Agency and Morgan Guarantee Trust
Company of New York
—2—
WPADSERT:830
REQUEST FOR CITY COUNCIL/ .
REDEVELOPMENT AGENCY ACTION
AND HUNTINGTON BEACH PUBLIC FINANCE AUTHORITY
RH92jData -March . 1992. .._
Submitted to: Honorable Mayor/Chairman and City Council/Agency Members
Submitted by: Michael T. Uberuaga, City Administrator/Executive Direct�611?
Prepared by: Barbara A. Kaiser, Deputy City Administrator/Economic Devel
Robert Franz, Deputy City Administrator/Administrative Se es
Subject: Third Amendment — The Waterfront Disposition k Developm
Robert L. Mayer Trust/Waterfront Construction No. I'
Consistent with Council policy? t ) Yes P4 New Policy or Exception R -US r-wY
Statement of Issue, Recommendation, Analysis, Funding Source, Alternative Actions, Attachments:
STA'I SENT OF_SSID
The existing: DDA between the Redevelopment Agency and the Robert L. Mayer Trust was
originally approved in 1988. Presented herewith is the proposed Third Amendment to this
document through which the Redevelopment Agency will prepay certain financial
obligations.
1. Conduct a public hearing.
' 2. Adopt City Council and Redevelopment Agency resolutions approving the Third
Amendment' to the Disposition and Development' Agreement between the
Redevelopment Agency of the City of Huntington Beach and Robert L. Mayer,
Trustee of Robert L. Mayer Trust.
3. Authorize Agency Chairman/Mayor and Clerk/City Clerk (or designee) to execute
approving resolutions and DDA Amendment.
4. Approve Notice of Exemption as environmental review of the proposed DDA
Amendment.
5. Approve in concept the offer of J.P. Morgan Bank (underwriters for the Agency's
refinancing bond issue) to make a temporary loan (up to 6 months) to the Agency of
$4,300,000 (net loan) to be used by the Agency to pay it's obligations under the
amended DDA and direct staff to prepare appropriate loan documents for subsequent
Agency approval. Loan to be repaid from proceeds of the Agency's refinancing bond
issue as approved on March 2, 1992.
A Disposition and Development Agreement (DDA) approved in 1988 specified the
obligations of both Robert L. Mayer Corporation and the Redevelopment Agency in
regards to the development of the multi phased development known as The
Waterfront. Under the terms of the original DDA the Redevelopment Agency had
- certain obligations to reimburse Robert L. Mayer Corporation for expenses incurred in
the construction of The Waterfront Hilton (reimbursables ). In addition, the Agency
agreed to pay to the Robert Mayer Corporation a portion of the tax increment and
transient occupancy tax generated by the Hilton over a period of time (developer
Incentives).
NO 4/84
V
RCA/RAA ED 92-15
March 16, 1992
Page two
The Third Amended DDA proposes to change the way these amounts are paid and
specifically to pay reimbursable expenses of approximately $6.2 million in cash of
$4.3 million and to reduce the term of developer incentive payments from ten years
to terminate on January 1, 1993 (see attached summary of the current and proposed
DDA that was also included as part of the Request for Redevelopment Agency and
Public Finance Authority Action approved by. the City Council on March 2, 1992).
These changes were negotiated with the Robert Mayer Corporation by staff and under
authority granted by the Redevelopment Agency members in an Executive Session
conducted on February 10, 1992. Points of the proposed amendment are as follows:
1)—The First California financing (Second DDA Amendment ) is terminated and the
City/Agency has received a release from First California Capitol Market Groups,
Inc. satisfactory to the City/Agency Counsel.
2) The Agency will issue tax allocation bonds using annual redevelopment tax
Increment revenues equal to 80 per cent of the current annual tax increment
generated by The Waterfront Hilton (net proceeds of approximately $4.3 million).
The timing of this issuance of bonds is dependent on favorable interest rates. The
recommended temporary loan from J.P. Morgan will provide funds pending
issuance of bonds. These proceeds to be paid to Dal-Ichi Kangyo Bank for use in
settlement of the J.A. Jones lawsuit against Waterfront Construction No. 1 with
any remaining balance to fund additional interest reserves on the Hilton loan.
3) The Agency will pay to DKB accrued Paragraph 4 (Developer Incentive payments)
tax increment and transient occupancy tax generated by the Waterfront Hilton
(estimated $496,000) plus 60% of the actual (10%) transient occupancy taxes
enerated by the Hilton for the balance of calendar year 1992 (estimated
390,000) to be utilized as additional interest reserves.
4) The payment of the monies discussed in 2 and 3 above will fully discharge the
Agency's responsibility for those reimbursable expenses ($6,158,901 as of 3/2/92)
owed under Paragraph 5 of Attachment Nd. 5 of the Disposition and Development
Agreement between the Mayer Trust and the Redevelopment Agency and
discharge any further incentive payments regarding the Hilton under Paragraph 4
of Attachment 5 of the existing Disposition and Development Agreement (present
value of future payments is an estimated $3.1 million as of 3/2/92).
5) If construction of Phase II of The Waterfront (Sheraton Grande) commences, the
Agency will commit 60% of the actual (10%) of the transient occupancy tax
generated by the Hilton to debt service on a bond issue to finance the Agency's
Phase 11 obligations under the existing DDA. From January 1, 1993 until the sale
of this future bond Issue, however, the 60% of the actual (10%) of the transient
occupancy tax generated by the Hilton will be retained by the Agency for any
lawful purpose.
RCA/MA ED 92-15
March 16, 1992
Page three
If approved, the Third Amendment to the DDA will result in net savings to the
Redevelopment Agency by shortening the term of developer incentive payments
significantly and by reducing the amount owing for reimbursable expenses from
approximately $6.2 million to $4.3 million. Also, since the reimbursable obligation
will be paid in cash it will eliminate interest which would have accrued at 10% per
year under terms of the original DDA (the economic impact of the proposed
amendment is more fully described in the attached summary report prepared by
-independent economic consultant Keyser Marston Associates, Inc. in accordance with
Section 33433 of the Health and Safety Code).
5r
The Agency authorized, on March 2, 1992, issuing bonds to generate $4,300,000 for
the discharge of debt to the Waterfront as a part of the refinancing of 1988 Agency
debt. In the event the refinancing projects to save at Ieast $100,000 in debt service
payments, the refinancing will go forward. if this criteria is not met, the Agency
could issue a smaller "stand alone" bond issue which would generate funds for the
discharge of the Waterfront debt only. A smaller "stand-alone" bond issue is
inefficient in terms of the fixed costs of bond issuance (printing costs, bond counsel
and rating agency fees) and would result in staff time and effort for two bond issues.
Although documents have been prepared to issue a "standalone" bond issue (see
alternative #2 below) the staff recommendation is to approve a temporary Ioan from
J.P. Morgan Bank as outlined in their letter dated March 5, 1992.
The temporary loan from J.P. Morgan would provide funds ($4,300,000) to discharge
the Waterfront debt. The Agency would pay a low interest rate (less than 5%) on the
loan which would be repaid when the Agency's refinancing bond issue goes forward
(expected within 3-6 months). if the refinancing bond issue criteria (see discussion
above) is not met within the next 6 months, then the Agency staff will recommend a
"stand-alone" bond issue to repay the J.P. Morgan loan. All debt service and interest
payments will be funded from property tax and transient occupancy tax revenues from
the Waterfront Hilton.
1. Do not approve the proposed Third Amendment to the DDA.
2. Authorize a "stand-alone" bond issue to discharge the Waterfront debt. Adopt
Redevelopment Agency Resolution 12.1 and Huntington Beach Public Finance
Authority Resolution _6_ authorizing the sale of bonds (estimated net proceeds
of $4,225,000) to be issued instead of the refinancing bonds previously authorized
(3/2/92).
Sale of Tax Allocation bonds and Tax Increment/Translent Occupancy Tax accrued in
1992.
RCA/RAA ED 92-15
March 16, 1992
Page four
ATIAMEM
1.. J.P. Morgan letter dated March 5, 1992
2. Environmental Exemption
3. Discharge of Debt (Chart)
4. .Summary Report 33433
S. Disposition and Development Agreement
6. ResoIutions of City Council/Redevelopment Agency/Huntington Beach Finance
Authority
MTUBAK/SVK: jar
0563r
a
JPMorgan
William P. Hansen Jr.
C,ce President
Public Finance
Margan Guaranty
Tnstt Company of
New York
i Represenutive Offioe
101 Cavonua Street
Suite 2750
San Francisco CA 14111
Tel: 415 954-3270
Fax: 415 954-3244
Mr. Robert Franz
Deputy City Administrator
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
March 5, 1992
It M
Hunter Holding has brought me up to date on your financial deeds, and I am
pleased to say that Morgan Guaranty is prepared to offer you an interim
alternative to a stand-alone new money bond issue for your Main Pier Project
Area. Borrowing from us would give you timing fl.-xibility for your bond sale
and the potential efficiency of including this new money need in the refunding
issue you have been discussing with Hunter. We currently can Iend at very
attractive rates. For instance, if you were to borrow today, your interest cost for
up to 6 months would not exceed 5 % .
The terms under which we are prepared to lend are as follows:
BoRRowER: Huntington Beach Redevelopment Agency
AMoun: $4,750,000
PUMSE: Bridge loan to finance infrastructure for the Main
Pier Project Area.
Up-F*Roh'r FEE: None
Couammwr FEE: None
BORmvm RATE:
RATE BASH
N'lE nr PEmws:
A subsidiaryof
J.P. Morgan & Co.
Incorporated
Adjusted LIBOR + 1/2%
Actual/360
1, 2, 3 or 6 months
JPMorgan
EXPIRATION OF
Cmmmiftxr ro LEND: April 15, 1992
FINAL MATURM
OF LOAN: September 30, 1992
PMAYMENr: Loans prepaid are subject to a $500 administrative
charge and break -funding costs (if any).
SE£ LMM: Pledge of tax increment revenues from the Main
Pier Project Area, subordinate to the pledge of such
tax increment revenues under the Main Pier Loan
AgreesnenE securing the Huntington Beach Public
'Financing Authority 1988 Revenue Bonds, Series
A.
ADDmoNAL COVENANTS: All borrowing to be repaid from the proceeds of the
next sale of bonds for the Main Pier Project Area.
LEGAL EXPENSES: We anticipate using White & Case, Los Angeles, as
bank counsel. Their fees and expenses are for the
account of the Huntington Beach 'Redevelopment
Agency, whether or not the loan closes. Their fees
and disbursements will not exceed $25,000 if the
loan closes by April 15, 1992 in the structure
currently envisioned.
We have provided you, we think, with an attractive alternative, Bob. Please give
me i call if you have any questions. I look forward to hearing from you.
Sincerely,
cc: Hunter Holding, V.P.; J.P. Morgan Securities
Neil Rust, Esq, White & Case
Mark Northcross, Kelling, Northcross & Nobriga
Scott Sollers, Stone & Youngberg'
Ed Schilling, Stone & Youngberg
L4-Ub-9Z U3:4UPY. FEQM Sti6x ik virvai btmn iv
/I Lfr Q %�
! TO! i F r
M�MQRA�AUM ��o `�.Z
TO: The Honorable Mayor and Members of the Huntington
Reach City Cnunnil
FROM: Arthur De La Loza, Deputy City Attorney
Thomas P. Clark; Jr., Agency Special Counscl
RE: Huntington Beach Redevelopment Agency Proposed
$A_;35.0. 000 Loan VA911jt.Y. __ _ ..
nATE: April 6, 1992
This memorandum provides a list of those provisions of the
proposed Credit Agreement between the Agency and Mvtyan
Guaranty Trust -Company of New York that have been identified by
Agency staff and legal counsel as needing clarification and/or
revision. Following the list, the timing of the closing of the
proposed credit agreement is discussed, along with the
applicability of cartain statutes, requiring public hirlaing And.
an interest rate cap, to the proposed credit agreement.
section 1.01. Definiti urk .
"Available Tax Revenues" (p. 2). The Agency would like
this definition wialffied•:with references to the Third
Amendment to the Waterfront Disposition and Development
Agreement (the "Third Amendment to DDA").
'Breakage Costs" (p./2). The definition is too broad. Bob
Franz has already discussed this issue with Mark Northcross of
Kelling Northcross and Norbriga, Inc., and Mr. Northcross is in
the process of working out appropriate language with the Morgan
attorney.
"Law" (pp. 4-5). This definition refers to both the
California Health and Safety Code and California Covcrnment
Code, thereby creating some; ambiguity in the document's
subsequent use of "Law" as a defined term.
"Senior Loan" (p. 6). The Agency would like language
clarifying that the credit agreement loan is juniuor to the
"senior loan."
"Tax Revenues" (p. 6). This definition should bo revised
to indicate that the revenues defined are, those accruing from
04-05-92 03:40PM FROM SYCSR NE POET HA CH TO 9/3741590
rUUj
and after the implementation date of the Third Amendment to
DDA. Amounts payable to the Agency under agreements entered
into pursuant to Health and Safety Code Section 33445 should
also be excluded from the definition, as agreements entered
into pursuant to Health and Safety Code Section 33401 already
are. The Agency will seek to have the final parenthetic
exception deleted in its -entirety.
Section 2.06. Sgr.Urity_for P yMep .;.; F_Vrther As6yrance.
(p. 10)-The Agency seeks clarification on what Morgan demands
in requiring the Agency to "perfect" its pledge and the
security interest created by the loan facility (beyond that
already providod Health and Safety Codo Section 33641.5).
Section 2.07. , titeergst:_ ntereSt Pa�rjQda. (p. 1,
Subsection (a), line 3) change "mcale available to the Agency"
to "funded."
Section 2.09. Qption_a1 PreQas ents. (p. 10) The reference
to "Breakage Costs" may be problematic unless the definition of
"Breakage Costs" is more tightly clarified in a manner
acceptable to the Agency.
SeCtip 2.1 . 'Anjntory �ennvment. (pp. 11-12). This
Section raises a question regarding the Agency's exposure to
"Breakage Costs" as such are currently defined and, at this
e Potential magnitude of these cost is unknown. This
problem may be remedied by tightening the definition of
"Breakage Costs." The reference (lines 6-8) to "any bonds,
notes, certificates of participation or other evidence of
Indebtedness. . . " shoulA be restricted to Main Pier Project
Area and Available Tax Revenues.
Section13 . Funding Losses. (p. 13). This section is
problematic`in�ght of the current overbroad definition of
"Breakage_Cuts" which could be alleviated by a clarification
-e-n iq tening of that definition. The Agency also wants to
know why Morgan wants the Agency to reimburse "an existing or
prospective Participant" (line 10) for any Breakage Costs.
Section 3.01. Increased COSt., of_[;aintin ng th CgMittn¢,n�
and RpduCed Return. (p. 13). The agency believes it is
Inappropriate for Morgan to expect ne ayencwy to lake the risk
on changes in the law which may effect the loan facility,
particularly in light of the short-term nature of the
facility. in connection with this, Morgan will need to
understand that this loan facility is not tax exempt.
Therefore, the Agency wants Morgan to raise any claim as to the
purported tax exempt nature of the facility going into the
Credit Agreement. The Agency doesn't want Morgan's tax
attorneys uvitilily back to the Agency after the Agreement in
0238Q/2460/000 - 2 --
04-06-92 03:40B1, i&OV SYC&R EEW ORT BEACH 10 y/3r41�yU
executed with claims pertaining to the purported tax exempt
nature of the Agreement,
(P. 14, Line 18). The Agency wants the word "solely"
inserted between "Sank" and "from AvailablA Tax Revenues."
(p.•24, line 20): the Agency would like the option of either
repaying the additional amounts for prepaying without penalty.
Section 4.01.ffl(p. 16, subsection (c)).
The opinion referred to and attached as Exhibit C to the
Agreement, will be submitted to Morgan as two opinions. The
City Attorney will opine as to Nos. 1, 2 (ii) with the
exception of the Third Amendment to thnT)nA, and 5. Stradling.
Yocca, Carlson & Rauth will opine as to Nos. 2 (i), (i.i) as to
the Third Amendment to the DDA, (izi), 3, 4, and 6. The Agency
will seek clarification as what Lo Morgan is asking for in
No. 7 and, if such clarification is given, either the City
Attorney or Stradling, Yocca, Carlson & Rauth will opine as
necessary and appropriate.
Section 5.02. Due Au��?,=�r�ti�]� ,No violation; _Ag
Default. (p. 18, last sentence). The Agency finds this
language overly broad and will seek its revision in order to
more narrowly focus it.
Section 5.07. Ng Sovereign Immunity. Morgan needs to
explain the representation it is asking the Agency to make.
Section 5,08. pledged Revenvez. This Section should be
revised so as to account for and acknowledge the fact that the
Agency must have the ability to continuing pledging tax
increment in connection with its ongoing activities.
Section 5.09. No ERiSA PJ_(P. 39) The Agency will
verify this internally.
Section 5.10. Env xonmental_rla.tters. (p. 19) The Agency
wants this section revised so as to clarify that the Agency is
not, in entering into the Agreement, acknowledging any
obligation on its part to remediato any Pnvirnmmnnhal hazards
or toxic releases.
Section 6.08. �imitHt,i�,�tLr,ht �. The Agency'
wants language included here that the agency's covenant i,
limited to Main Pier Project Area only.
Section 6.10. pavme._Qf_,L.o�31��.P¢..QxLey Maric�t Advance.
(p. 21, last sentience, fo»rhh line from bottom). The Agency
seeks to modify the last sentence by substituting: "to use its
best efforts to" for: "that it will" in order to prevent the
Agency from having to sell bonds prior to the Expiry Date at a
time when the Agency could face poor market conditions.
0238Q/2460/000 - 3 --
04-06-92 03:40PM FROM SYCH NEWPO:;T PEAU 'N V Pt l:)yU r UV;)
Section 8.01. Nam_}=. (p. 24) The Agency would like to
delete or qualif the ability of the parties to provide notice
by telex or facsimile.
SQCtion B.04. ExrPn5e5�.._!?C 1.m�tArYs3�e�-
indemnification. (p. 26) The agency believes $$15,000 is a
more appropriate cap on Morgan's legal fees and disbursements
to its c:ounuel wiLh regard to the Agreement, instead of the
current $25,000.
The Agency is seeking the short-term credit facility as a
rinancing component in connection with the Third Amendment to
DDA. Consequently, the Agency does not wish to close with
Morgan on the Agreement unless and until the Agency is ready to
fund its obligations pursuant to the Third Amendment to DDA.
For this reason, the Agency must arrange for the concurrent
closing of hoth the Agreement with Morgan and the Third
Amendment to DDA, in order that there be an equal priority on
both agreements.
APPLICABILYT _Q�STATJJT0RX T,NTURFMT_ RAC
CAP AND PUBLIC BIDOTNG PLOD BENTS
TO THE LOAN FAC14IT-Y.
Health and Safety Code Section 33601 permits an agency to
borrow money by the issuance of bonds gr otherwise. "Bonds" is
defined as those financial obligations and debt instruments
iaaued by en agency pursuant to Articlo 5 of Chapter 6 of the
Community Redevelopment Law. (Health and Safety Code
Section 33602).. The interest rate on such "bonds" may not
exceed the 12% cap required by Government Code Section 53531,
and are required to be sold at public sale held after published
notice. (Health and Safety Code Sections 33645(d); 33646). As
the proposed Agreement, constitutes a short -.term credit
facility, it is not a "bond" within the meaning of Health and
Safety Code Section 33602, it is not subject to these
limitations.
Moreover, the Agency's authority fci eflteLillg into the
Agreement with Morgan is provided by Chapter 6 of Division 6 of
Title 1 of the Government Code (Sections 5900 C_t geq.). All
types of indebtedness issued pursuant to Chapter 11 may be sold
at either public or private sale and are exempt from the usary
of provisions of Article XV RAntinn 1 of hhe California
Constitution.
02380/2460/000 - 4 -
i
THIRD AMENDMENT TO
DISPOSITION AND DEVELOPMENT AGREEMENT
By and kmong THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH,
ROBERT L. MAYER, as Trustee of the
Robert L. Mayer Trust of 1982,
dated June 22, 1982, as amended, and
WATERFRONT CONSTRUCTION NO. 1,
a California limited partnership
THIS THIRD AMENDMENT TO DISPOSITION AND DEVELOPMENT
AGREEMENT (the "Third Amendment") is entered into this 147h
day of March, 1992 (the "Effective Date") , by and among the
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (the
"Agency"), ROBERT L. MAYER, as Trustee of the Robert L. V,ayer
Trust of 1982, dated June 22, 1982, as amended ("Developer"),
and WATERFRONT CONSTRUCTION N0. 1, a California limited
partnership ("Waterfront") (collectively, the "Parties").
R E C I T A L S:
A. On or about August 15, 1988, the Agency and
Developer entered into a Disposition and Development Agree-
ment (the "Original DDA").
B. On or about April 10, 1989, Developer, Waterfront,
and certain affiliated entities entered into an Assignment
and Assumption Agreement pursuant to which Developer assigned
to Waterfront and Waterfront assumed (through a series of
assignments to the affiliated entities) all of Developer's
right, title, and interest in and to that portion of the
3/6/92
-1-
f�
"Site" described in the Original DDA as "Separate Development
Parcel No. 1."
C. On or about June 17, 1991, the Agency and Developer
entered into a First Amendment to Disposition and Development
Agreement (the "First Amendment"). Waterfront,has executed a
document consenting to the First Amendment. On or about
August 1, 1991, the Agency, Developer, and Waterfront entered
into a Second Amendment to Disposition and Development
Agreement (the "Second Amendment"). The Original DDA, the
First Amendment, and the Second Amendment are collectively
referred to herein as the "Existing DDA."
D. The Parties desire to amend the Existing DDA as set
forth in this Third Amendment.
A G R E E M E N T:
Based on the foregoing Recitals, which the Parties here-
by acknowledge to be true and correct and incorporate into
this Third Amendment, and for good and valuable considera-
tion, the receipt and sufficiency of which is acknowledged by
all Parties, the Parties hereby agree as follows:
1. All defined terms in this Third Amendment shall
have the same meaning as such terms have in the Existing DDA,
except as may be expressly provided herein.
2. On or about January 31, 1992, Developer, Water-
front, Robert L. Mayer, individually, and First California
Capital Markets Group, Inc. ("First California"), entered
-2-
into a Release of Rights under Second Amendment to Disposi-
tion and Development Agreement, Assignment Agreement, and
Consent to Assignment (the "Release"), a true and correct
copy of which has been provided to Agency. The Parties
hereto acknowledge that all rights of First California under
the Existing DDA and under the Assignment Agreement and the
Consent to Assignment referred to Recital F of the Second
Amendment have terminated, been reassigned to Developer
and/or Waterfront, as applicable, and are of no further force
or effect, all as set forth in the Release. Developer and
Waterfront covenant to Agency that they will timely and
faithfully make the payments to First California that are
required to be made in accordance with Paragraph 3 of the
Release and will indemnify, defend, and hold harmless Agency
with respect to any claim or cause of action against Agency
in connection with such Release.
3. On or before March 31, 1992, Agency shall exercise
best efforts to issue or cause the Huntington Beach Public
Financing Authority (the "Authority"), a joint powers autho-
rity in which Agency is a member, to issue and sell bonds
(the 111992 Revenue Bonds") secured by Agency's pledge of
property tax increment revenues. Insofar as the portion of
the 1992 Revenue Bonds allocated to Developer and Waterfront
is concerned, the 1992 Revenue Bonds shall be sized based
upon Eighty Percent (80%) of the property tax increment
revenues allocated and paid to Agency from Separate Develop-
ment Parcel Ho. 1 (the Waterfront Hilton) and a thirty (30)
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T
year amortization schedule. If the Agency or the Authority,
as the case may be, determines in its reasonable discretion
to include in the 1992 Revenue Bonds a refunding of the
Authority's outstanding 1988 Revenue Bonds (Series A)
("Refunding issue"), Agency will use its best efforts to
insure that the portion of the net proceeds from the 1992
Revenue Bonds allocated and available for payment to
Developer and Waterfront hereunder shall be in the sure of
Four Million Three Hundred Thousand Dollars ($4,300,000). if
the Agency or the Authority, as the case may be, determines
in its reasonable discretion to not refund the outstanding
1988 Revenue Bonds (Series A) at this time, Agency or the
Authority, as the case may be, will use its best efforts to
issue and sell the 1992 Revenue Bonds as a "stand-alone"
issue sized in the manner described in the second sentence of
this Paragraph 3 ("Stand Alone Issue") in which event the net
proceeds of the Stand Alone Issue allocated and available for
payment to Waterfront hereunder shall be the actual net
proceeds not to exceed Four Million Three Hundred Thousand
Dollars ($4,300,000.00) but not less than Four Million Two
Hundred Twenty -Five Thousand Dollars ($4,225,000.00). Agency
shall pay or cause Authority to pay to Waterfront or order
the entire net proceeds allocated to Waterfront hereunder at
the closing in full payment of the amounts heretofore
advanced by Developer pursuant to Paragraph 5 of Attachment
No. 5 of the Existing DDA (the "Phase 1 Paragraph 5 Costs"),
including accrued interest thereon. The Parties acknowledge
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that, pursuant to Paragraph 1 of the Second Amendment, the
outstanding principal balance of the Phase 1 Paragraph 5
Costs and accrued interest as of March 31, 1992 (the
projected outside closing date for the 1992 Revenue Bonds),
would be approximately Six Million Two Hundred Seventy -Five
Thousand Dollars ($5,275,000.00).
in the event that for any reason the Agency or the
Authority, as the case may be, fails to issue and sell the
1992 Revenue Bonds on or before April 30, 1992, or is unable
to achieve net proceeds to Developer and Waterfront of
$4.3 million in the case of the Refunding Issue or
$4.225 million in the case of the Stand Alone Issue, any of
the Parties shall have the right to terminate this Third
Amendment by delivery of written notice to the other Parties
and none of the Parties shall have any rights or obligations
with respect to the others except as to Paragraphs 1, 2, 9,
and 10 hereof which shall survive such termination and remain
in full force and effect.
4. Agency shall pay and reimburse to waterfront all
accrued "Property Tax Increment" and interest thereon that is
owed to Waterfront under Paragraph 5 of Attachment No. 5 of
the Existing DDA (based on 38--1/2% of the Property Tax
Increment from Separate Development Parcel No. 1) for the
period corimencing on April 28, 1989 (the date of the Disposi-
tion Transfer for said parcel) through the closing date of
the 1992 Revenue Bonds, less any portion of such amount
previously paid. For purposes of this Paragraph 4, the term
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"Property Tax Increment" shall have the meaning ascribed in
Paragraph 4(b)(ii) of Attachment No. 5 of the Existing DDA;
provided, however, that Property Tax Increment shall be
calculated based only on property taxes and possessory
interest taxes actually paid pursuant to the tax bills for
Separate Development Parcel No. 1 through the joint consoli-
dated secured tax bill for the 1991-1992 fiscal year (first
installment delinquent after December 10, 1991: $224,880.18;
second installment delinquent after April 10, 1992:
$224,880.18). including any portion of the delinquent
penalties and interest paid pursuant to such tax bill that
may be allocated .and paid to Agency and included within
Property Tax Increment, but not including any supplemental or
other property tax bills applicable to Separate Development
Parcel No. 1 after the date of such tax bill. The date of
Agency's payment of that portion of such accrued Property Tax
Increment held by Agency and owing to Waterfront on the
Effective Date of this Third Amendment shall be made at the
closing of the 1992 Revenue Bonds. The date of Agency's
payment of that portion of such accrued Property Tax
Increment attributable to tax payments made by Waterfront
pursuant to the joint consolidated secured tax bill for the
1991-1992 fiscal year (first and second installments) shall
be made within ten (10) days after Agency's receipt of same
from the County of Orange. The portion of such Property Tax
Increment attributable to tax payments made by Waterfront
pursuant to the second installment of taxes for the 1991-1992
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fiscal year shall be prorated by dividing the number of days
in the period covered by the second installment occurring on
and before the closing date of the 1992 Revenue Bonds by 182
(the total number of days in the period covered by the second
installment). Thus, for example, if the 1992 Revenue Bonds
were to close on March 31, 1992, Waterfront's pro rata share
of the non -delinquent portion of Property Tax Increment
attributable to the second installment of taxes for the
1991-1992 fiscal year would be calculated as follows:
38-1J2% x 911 x $224,880.18 = $43,289.43
182
1 91 days from January 1, 1992, through closing date of
1992 Revenue Bonds on March 31, 1992
2 182 days from January 1, 1992, through June 30, 1992
Property Tax Increment attributable to tax payments made by
Waterfront pursuant to the joint consolidated secured tax
bill for the 1991-1992 fiscal year (first and second install-
ments) shall be deemed to have "accrued" prior to the closing
date of the 1992 Revenue Bonds even if Waterfront does not
actually pay the first or second installment of such taxes
until a later date; provided, however, that in no event shall
this Third Amendment be interpreted to require Agency to pay
accrued Property Tax Increment to Waterfront prior to
Agency's actual receipt of taxes upon which Agency's payment
is based.
In addition, Agency shall pay and reimburse to
Waterfront all accrued "TOT" (as that term is defined in
-7-
Paragraph 4(b)(i) of Attachment No. 5 of the Existing DDA)
and interest thereon that is owed to Waterfront under
Paragraph 5 of Attachment No. 5 of the Existing DDA from the
Waterfront Hilton located on Separate Development Parcel
No. 1 (based on 50% of the 6% TOT rate in effect on the date
Agency and Developer entered into the Original DDA) for the
period commencing on the date said hotel opened for business
(on or about July 17, 1990) through December 31, 1991, less
any portion of such amount previously paid. The date of such
payments shall be in accordance with the Existing DDA. TOT
shall be deemed to have "accrued" on the date the hotel guest
pays the same, regardless of the date payment is rude by
Waterfront to City; provided, however, that in no event shall
this Third Amendment be interpreted to require Agency to pay
accrued TOT to Waterfront prior to Waterfront's actual
payment of the taxes upon which Agency's TOT payment is
based.
5. Agency shall pay to Dai-Ichi Kangyo Bank ("Bank"),
on Waterfront's behalf, the sum of:
(i) That portion of the accrued transient occu-
pancy taxes ("TOT") paid to the City of
Huntington Beach or Agency with respect to the
hotel on Separate Development Parcel No. x
represented by the six percent (6%) TOT rate
in effect on the date Agency and Developer
entered into the Original DDA for the period
commencing on the date said hotel opened for
-8-
business (on or about July 17, 1990) through
December 31, 1992, less the sum of (A) the
portion of such amount previously paid by
Agency to Waterfront pursuant to Paragraph 5
of Attachment No.' 5 of the Existing DDA and
(B) any additional portion of such amount
required to be paid by Agency to Waterfront
pursuant to Paragraph 4 of this Third Amend-
ment; with the understanding that TOT shall be
deemed to have "accrued" on the date payment
is made by such hotel guest to Waterfront,
regardless of the date payment is made by
Waterfront to City; provided, however, that in
no event shall this Third Amendment be
interpreted to require Agency to pay accrued
TOT to Bank, on Waterfront's behalf; prior to
City's or.Agency's actual receipt of the taxes
upon which Agency's TOT payment is based; and
Thirty-eight and one-half percent (38-1/2%) of
the accrued Property Tax Increment with
respect to Separate Development Parcel No. 1
for the period commencing on April 28, 1989
(the date of the Disposition Transfer for said
parcel), through the closing date of the 1992
Revenue Bonds, with the calculation of such
amount made in accordance with the first
paragraph of Paragraph 4 of this Third Amend-
ment;
(iii) Interest on the unpaid principal balance of
the revenues referenced in subparagraphs (i)
and (ii) innediately above from the date such
revenues are received by the City and/or
Agency through the date of payment to Bank, on
Developer's behalf, at the rate of ten percent
(10%) per annun, compounded monthly.
Notwithstanding the foregoing, it is understood that in no
event shall this Third Amendnent be interpreted to require
Agency to pay accrued TOT or Property Tax Increment (or
interest thereon) to Bank prior to Waterfront**s payment of
the TOT taxes and/or possessory interest or other property
taxes upon which Agency's payment is based.
Agency's first payment under this Paragraph 5 shall
be made on April 15, 1992, or fifteen (15) days after the
closing date on the 1992 Revenue Bonds, whichever occurs
later. Thereafter, payments shall continue to be made on the
fifteenth (15th) day following the end of each calendar quar-
ter through the calendar quarter ending December 31, 1992, or
until all accrued amounts are paid as provided herein. Each
quarterly payment shall be calculated on the amount of TOT
and possessory interest or other property taxes paid by
Waterfront and received by City or Agency, as applicable,
through the end of the preceding calendar quarter.
-10-
6. The sale of the 1992 Revenue Bonds and application
of the net proceeds thereof as provided in Paragraph.3 and
Agency's payments in accordance with Paragraphs 4-5 herein
shall be in lieu of and shall constitute a full and final
settlement, payment, and discharge of all of Agency's payment
obligations, including interest thereon, under Paragraphs 4
and 5 of the Existing DDA with respect to Separate Develop-
ment Parcel No. 1 (the Waterfront Hilton), including without
limitation payment of the "Phase 1 Paragraph 5 Costs" refer-
enced in Paragraph 1 of the Second Amendment. Without a
further amendment of the Existing DDA and this Third
Amendment, Agency shall have no obligation to pay to or for
the benefit of Developer or Waterfront any TOT with respect
to Separate Development Parcel No. 1 accruing on or after
January 1, 1993.
7. Waterfront covenants that concurrently with distri-
bution of the net proceeds of the 1992 Revenue Bonds in
accordance with Paragraph 3 of this Third Amendment, Water-
front shall cause an amount equal to such net proceeds to be
paid to Bank (or otherwise in a manner acceptable to Agency's
Executive Director and the City Attorney) for the following
limited purposes:
(i) Settlement of litigation and claims arising
out of construction of the Waterfront Hilton,
including the following: Waterfront Construc-
tion_#1 V. J. A. Jones Construction Company,
et al. and related cross -action, Orange County
-11-
Superior Court Case No. 657682; R & D Fire
Protection Corpanv. Inc. v. J. A. Jones Con-
struction Company, et al., Orange County
Superior Court Case No., 674606; E.F. 'Brady
Company, Inc. v. J.A. Jones Construction
Conpany, et al., Orange County Superior Court
Case No. 647630; and, SASCO Electric v. J.A.
Jones 'Construction Company, et� al., orange
County Superior Court Case No. 654338; and
(ii) Deposit of the balance of the net proceeds of
the 1992 Revenue Bonds with'Bank for interest
reserve purposes under the Credit Agreement
dated as of March 31, 1989, between Waterfront
and Bank, as the same may have been amended or
may hereafter be amended from time to time.
S. In addition to the termination provisions set forth
in Paragraph 3 hereof, Agency may terminate this Third Amend-
ment upon written notice to Developer and Waterfront if,
prior to the closing of the 1992 Revenue Bonds, and in no
event later than April 30, 1992, the following conditions are
not satisfied (or waived by Agency in its sole and absolute
discretion):
(i) Waterfront delivers to the City Attorney of a
fully executed modification to the afore --
described Credit Agreement between Waterfront
and Bank and/or related documents which pro-
vide for extension of the maturity date on
-12-
Waterfront's construction loan to a date no
earlier than December 31, 1992, and Bank's
approval of Waterfront's payments provided for
in Paragraph 7 herein, including the amount of
the interest reserve to be provided to Bank;
and
(ii) Bank approves this Third Amendment and
releases any right, title, and interest that
it might otherwise have in any revenues pay-
able by Agency with respect to Separate
Development Parcel No. 1 under Paragraphs 4
and 5 of Attachment No. 5 of the Existing DDA
and Paragraph 1 of the Second Amendment
(excepting such right, title, and interest
that Bank may have in the revenues payable in
accordance with Paragraphs 3-5 of this Third
Amendment) , with the form and content of such
release being subject to the reasonable
approval of the City Attorney.
Agency agrees to act reasonably and to cooperate with
Developer and Waterfront in reviewing, approving, and execu-
ting any documents required to accomplish the purposes of
this Paragraph S. In the event that Agency terminates this
Third Amendment pursuant to this Paragraph 8, none of the
parties shall have any rights or obligations with respect to
the others except as to Paragraphs 1, 2, 9, and 10 hereof
which shall survive such termination and remain in full force
-13-
and effect. Subject to Agency's rights of termination, in no
event shall Developer's or Waterfront's failure to satisfy
either of the foregoing conditions constitute a default by
Developer or Waterfront hereunder.
9. Paragraph 7(b) of Attachment No. 5 of the Existing
DDA is hereby amended by deleting the following words in the
introductory clause: "Except as expressly set forth in Para-
graph 4(f) and Paragraph 5(vi) of this Attachment No. 5,11.
Paragraph 7(c) of Attachment No. 5 of the Existing DDA is
hereby deleted and Paragraphs 7(d) and (e) are hereby re -
lettered as Paragraphs 7(c) and (d), respectively.
10. Paragraphs 1 and 7 of the Second Amendment are
superseded by this Third Amendment. Paragraphs 2, 4, 5, 8,
10, and 12 and the second sentence of Paragraph 11 of the
Second Amendment are hereby deleted in their entirety.
-14-
11. Except as a -mended herein, the Existing DDA shall
remain in effect in accordance with its terms.
REDEVELOPMENT AGENCY OF THE
CITY OF HUN NGTON BEACH
B�' :
Ch irnan
ATTEST:
Agency Secretary
APPROVED AS TO FORM: INITIATED AND APPROVED AS TO
r CONTENT
Agency Special Cojjpsel Deputy City Administrator
REVIEWED AND APPROVED APPROVED:
A5 TO FORM:
City ttor ey/Ag nc City Administrator/ cutve
A torney��1_1t� Director
ROBERT L. MAYER, as Trustee of
the ROBERT L. MAYER TRUST OF
1982, dated June 22, 1982, as
amended
By: ROBERT L. MAYER
[signatures continued on next page]
-15-
9/112/065580-0001/166
WATERFRONT CONSTRUCTION NO. 1,
a California limited partner-
ship
By: The Waterfront, Inc., a
California corporation,
General. Partner
-16-
By:
Robert' L. ayer
Chairman of the oard
and Chief Financial
Officer
By: � -
Stepherf K. Bone
President
the foregoing instrument is a correct
copy of the original on file in this office
Attest _ _ / -- 1912-
CONNIE BROCKWAY
City Clerk and Ex -off icio Clerk of the City
Council of the Clty of Huntington Beach,
Cal. r
BY l� p�3ti